Global growth to remain subdued in 2025 amid uncertainty, UN report warns

This article is published in association with United Nations.

Global economic growth is projected to remain at 2.8 per cent in 2025, unchanged from this past year, according to a UN flagship report released on Thursday.  

The World Economic Situation and Prospects (WESP) 2025 report shows that despite withstanding a series of mutually reinforcing shocks, global economic growth has stagnated and remains below the pre-pandemic annual average of 3.2 per cent.

The report produced by the UN Department of Economic and Social Affairs (DESA), highlights the enduring impact of weak investment, sluggish productivity, and high debt levels on global economic performance.

UN Secretary-General António Guterres, in his foreword, called for decisive action to address these challenges.

“Countries cannot ignore these perils. In our interconnected economy, shocks on one side of the world push up prices on the other. Every country is affected and must be part of the solution,” he stated.

Uneven path ahead

The United States is expected to experience a slowdown in 2025 as labour markets soften and consumer spending settles down, the report projects.

Meanwhile, despite easing inflation and resilient labour markets, Europe’s economic recovery remains constrained due to recurring challenges such as weak productivity growth and an ageing population.

In East Asia, the economy is projected to sustain relatively strong growth, supported by robust private consumption and stable performance in China.

On the other hand, South Asia is poised to remain the fastest-growing region, driven by India’s continued economic expansion.

In Africa, modest improvements in growth are anticipated, thanks to recoveries in major economies including Egypt, Nigeria, and South Africa. Although conflicts, rising debt-servicing costs and climate-related challenges weigh heavily on the region’s prospects.

Overall, global trade is forecast to expand by 3.2 per cent in 2025, driven by strong exports from Asia and a rebound in services trade.

Moreover, inflation is projected to ease globally, declining to 3.4 per cent, providing some relief to businesses and households.

Food inflation remains a pressing issue in many developing countries.

Challenges facing developing economies

Nevertheless, many developing countries are expected to face persistent inflationary pressures, with one in five experiencing double-digit rates. High debt burdens and limited access to international financing will continue to hinder recovery.

Food inflation remains a pressing issue, with nearly half of developing countries experiencing rates above five per cent.

This has deepened food insecurity, particularly in low-income nations already grappling with extreme weather events, conflicts and economic instability.

The report warns that persistent food inflation, coupled with slow economic growth, could push millions further into poverty.

Critical minerals: opportunities and risks

Growing industrial demand for critical minerals, such as lithium and cobalt, presents both opportunities and risks.

For resource-rich developing countries, these minerals offer potential for growth, job creation and increased revenues to accelerate progress towards the 17 Sustainable Development Goals (SDGs).

However, the report warns that poor governance, unsafe labour practices and environmental degradation could undermine long-term benefits and exacerbate inequalities.

Calling for comprehensive policies to ensure sustainable extraction and equitable benefit-sharing, DESA chief Li Junhua emphasised: “Critical minerals have immense potential to accelerate sustainable development, but only if managed responsibly.”

Call for bold multilateral action

The report concludes with a call for bold multilateral action to address interconnected global crises, including debt, inequality and climate change.

Governments are urged to focus on investments in clean energy, infrastructure and critical social sectors such as health and education.

Stronger international cooperation is deemed essential for managing the risks and opportunities associated with critical minerals, ensuring that developing countries can benefit equitably and sustainably.