Global growth is projected to remain steady at 3.3%, in 2025, as per a recent World Economic Outlook from the International Monetary Fund (IMF). As Kavan Choksi further mentions, inflation is expected to drop to 4.2% in the year, and to 3.5% in 2026, which shall allow for further normalization of monetary policy among central banks across the world. To build stronger, more resilient economies, it is imperative for global leaders to focus on reviving and re-imagining growth.
Kavan Choksi briefly sheds light into the expected economic growth across the world in 2025
A remarkable resilience has been shown by the world economy in the last two years. The stability in global growth has been underpinned by many factors, starting from continued disinflation and monetary easing in many countries to softening commodity prices. Potential trade restrictions, geopolitical tensions, climate risks and ongoing conflicts, however, can pose significant challenges going forward. Many developing nations are still experiencing the effects from the pandemic and shocks of the last few years. Technological advancements and green transition do have the potential to boost growth, but its advantages might not be distributed evenly across nations.
Economic growth in the United States is expected to moderate from a robust 2.8% to 1.9 % in 2025. On the other hand, economic growth in China is likely to stay just below 5% in the coming years. Europe and Japan are forecasted to experience modest economic recovery in 2025 and 2026. A number of developing regions are likely to witnessed an uptick in an economic growth in 2025 and 2026. Africa is likely to experience a bit of growth acceleration, largely driven by recovery in the largest economies in the region, including Egypt, Nigeria, and South Africa. The Caribbean and Latin America are also projected to witness a mild growth recovery, supported by improvements in stronger export growth, easing monetary policies and private consumption.
As Kavan Choksi mentions, growth in Western Asia is likely to strengthen in the year of 2025. This growth is expected to be driven by improved prospects in Türkiye and Saudi Arabia, which are among the largest economies in the region. Due to the gradual easing of oil production cuts, the economic performance in the major oil-exporting countries of the region is expected to improve in 2025. The near-term outlook for South Asia is projected to stay robust, largely driven by strong performance in India and economic recovery in other regional economies. A bit of moderation of economic growth is expected in East Asia. The region shall especially benefit from the growing demand for products that are enhanced by artificial intelligence (AI).
Global inflation has eased in the last two years, with headline inflation falling from 5.6 % in 2023 to an estimated 4.0 % in 2024. It is projected to decline further to 3.4% in 2025. However, this outcome would also depend on how trade restrictions evolve. Inflation is expected to stabilize around central bank targets at least in developed nations. This would create room for a further gradual easing of monetary policy.
