UN predicts world economic growth at subdued 2.8% in 2025

The United Nations stated on Thursday that despite the global economy being impacted by conflicts and inflation last year, it has shown resilience, with a modest growth of 2.8% projected for 2025. The report, titled "World Economic Situation and Prospects 2025," indicates that strong (though slowing) economic growth in China and the United States, along with solid performance in India and Indonesia, are key factors driving this positive forecast.

The report also predicts a moderate recovery for the economies of the European Union, Japan, and the United Kingdom. Shantanu Mukherjee, Director of the Economic Analysis and Policy Division's Global Economic Monitoring Branch at the UN Department of Economic and Social Affairs, stated, "We are in a period of stable but below-par growth." He added, "That might sound a little like what we said last year, but actually, if you open the hood and take a close look, things are getting better."

The report notes that the U.S. economy outperformed expectations last year, driven by consumer and public sector spending, but its growth rate is projected to slow from 2.8% to 1.9% this year. Meanwhile, the Chinese economy, while maintaining strong growth, is expected to see a slight slowdown from 4.9% in 2024 to 4.8% in 2025 due to declining consumption and a weak real estate market that failed to offset the gains from public investment and exports. This has prompted the Chinese government to introduce policies to boost the real estate market, address local government debt, and stimulate demand.

The report also mentions that China’s "shrinking population and growing trade and technology tensions, if not addressed, could undermine medium-term growth prospects." The UN had predicted a 2.4% global economic growth rate for 2024 in January, while the report released on Thursday estimates the actual growth rate to be higher at 2.8%. Nonetheless, both figures are below the 3% global growth rate seen before the COVID-19 pandemic in 2020.

The report forecasts that the European economy will gradually rebound this year after experiencing lower-than-expected performance in 2024. Japan is expected to recover from a period of near-recession and recession. India is projected to drive strong growth in the South Asian region, with growth rates of 5.7% and 6% projected for 2025 and 2026, respectively. The report notes that India's 6.6% growth forecast for 2025 is underpinned by robust private consumption and investment growth.

The report emphasizes that "the driver of global poverty reduction over the last 30 years has been strong economic performance. This has been particularly true in Asia, where rapid economic growth and structural transformation have enabled countries like China, India, and Indonesia to achieve unprecedented scales and scope of poverty reduction." Li Junhua, Under-Secretary-General for Economic and Social Affairs, stated, "Despite unprecedented shocks in the past few years and the longest period of monetary tightening in history, the global economy has largely avoided a full-blown contraction."

However, he also cautioned that "the recovery is still largely driven by a few large economies."