The United Nations’ World Economic Situation and Prospects (WESP) 2025 report forecasts a global economic growth rate of 2.8% in 2025, maintaining the same pace as in 2024. This growth projection remains below the pre-pandemic average of 3.2%, signaling a slowed recovery amidst various economic challenges. According to the report, factors contributing to this lowered growth rate include weak investment, sluggish productivity growth, and high levels of debt across numerous countries. Although lower inflation and ongoing monetary easing might offer some economic boost, significant uncertainties still loom large on the global horizon. Geopolitical conflicts, heightened trade tensions, and high borrowing costs particularly affect low-income and vulnerable nations, thus threatening progress towards the Sustainable Development Goals (SDGs).
Regional Growth Expectations
The economic outlook reveals a diverse regional landscape. In the United States, the forecast shows a decline in growth from 2.8% in 2024 to 1.9% in 2025. This expected slowdown is primarily driven by a softening labor market and decreased consumer spending. Meanwhile, Europe is projected to experience a modest recovery, with GDP growth improving from 0.9% in 2024 to 1.3% in 2025. This recovery is aided largely by easing inflation rates and resilient labor markets. In contrast, East Asia is predicted to maintain strong growth momentum, with China’s stable expansion rate of 4.8% contributing to an overall regional growth rate of 4.7% in 2025.
South Asia continues to stand out as the fastest-growing region, with India’s robust 6.6% expansion leading to a regional growth rate of 5.7%. Africa’s economic growth is also forecast to rise modestly from 3.4% in 2024 to 3.7% in 2025, despite ongoing challenges such as conflicts, rising debt-servicing costs, and persistent employment deficits. These regional variations underscore the uneven recovery trajectory, highlighting that while some regions may experience robust growth, others continue to grapple with significant economic headwinds.
Global Trade and Inflation Dynamics
Global trade is expected to see a 3.2% growth rate in 2025, following a rebound of 3.4% in 2024. This trade growth is largely driven by Asia’s manufacturing exports and strong services trade performance. However, significant risks remain due to trade tensions, protectionist policies, and geopolitical uncertainties. On the inflation front, the report predicts a slight decline from 4% in 2024 to 3.4% in 2025, offering some relief to both households and businesses. As inflationary pressures ease, major central banks are likely to reduce interest rates further in 2025. Nevertheless, many developing countries may still face above-average inflation rates, with one in five countries potentially experiencing double-digit inflation levels.
Despite the potential easing of global financial conditions and a consequent lowering of borrowing costs, access to capital remains uneven across developing economies. High debt-servicing burdens and limited access to international financing continue to pose significant challenges for low-income nations. The report emphasizes the need for these countries to take advantage of any fiscal space created by monetary easing to invest in sustainable development, particularly in critical social sectors.
Risks and Opportunities in Critical Minerals
The WESP 2025 report identifies critical minerals—such as lithium, cobalt, and rare earth elements—as a significant opportunity for accelerating sustainable development and advancing progress towards the SDGs. For resource-rich developing nations, the increasing global demand for these minerals can stimulate economic growth, create jobs, and enhance public revenues. Nonetheless, the report also highlights potential risks, including poor governance, unsafe labor practices, environmental degradation, and market volatility. If not managed responsibly, these risks could exacerbate socioeconomic inequalities and damage ecosystems.
The report urges for bold multilateral actions to confront the crises of debt, inequality, and climate change. It contends that monetary easing alone will not be sufficient to rejuvenate global growth or bridge widening disparities. Governments are advised to avoid restrictive fiscal policies and instead prioritize investments in clean energy, infrastructure, and essential social sectors like health and education. Stronger international cooperation is paramount for managing the complexities associated with critical minerals, emphasizing the need for harmonized sustainability standards, fair trade practices, and technology transfers to ensure responsible and equitable resource management.
Conclusion
Global trade is projected to grow by 3.2% in 2025, following an estimated 3.4% rebound in 2024. This uptick is mainly fueled by Asia’s robust manufacturing exports and solid performance in the services trade. Yet, there are significant risks due to trade tensions, protectionist policies, and geopolitical uncertainties. On the inflation front, the report indicates a slight decrease, from 4% in 2024 to 3.4% in 2025, providing some relief to households and businesses alike. As inflationary pressures ease, major central banks are expected to lower interest rates further in 2025. Still, many developing nations may face higher-than-average inflation rates, with about one in five possibly experiencing double-digit inflation.
Even if global financial conditions ease, leading to lower borrowing costs, access to capital remains uneven in developing economies. High debt-servicing obligations and restricted access to international financing pose challenges for low-income countries. The report highlights the importance of these nations utilizing any fiscal space created by monetary easing to invest in sustainable development, especially in essential social sectors.