While global economic activity has shown resilience, weathering a series of shocks, growth rates remain below the pre-pandemic average. UN forecast: World economic growth to be weak in 2025 Economic developments
Russia’s GDP growth will slow to 1.5 percent in 2025 (from 3.8 percent in 2024), despite significant budget spending, as labor shortages constrain output and monetary policy remains restrictive, according to a report released today by the United Nations Department of Economic and Social Affairs.
Ukraine’s economy began to grow strongly in 2024, but activity has weakened following Russian attacks on the country’s energy infrastructure. GDP growth is expected to slow from 4 percent in 2024 to 2.7 percent in 2025. The economy will shrink by 20 percent compared to 2021.
Post-Soviet countries
Overall, moderate economic growth is expected in the post-Soviet countries in 2025. The regional economic outlook remains clouded by uncertainty related to the war in Ukraine and geopolitical tensions.
Regional growth is forecast to slow to 2.5 percent in 2025 (from 4.2 percent in 2024), reflecting an expected slowdown in the Russian economy and a return to a more moderate growth trajectory in other countries that had been experiencing high growth in 2023-2024 due to a sharp increase in intermediary trade with Russia.
Many countries in the region performed well in 2024, thanks to new opportunities in the Russian market and trade in intermediate goods and services with the Russian Federation. The development of common transport and energy infrastructure led to increased investment in Central Asia.
Remittance flows to the Caucasus and Central Asia remain high, despite the tightening of migrant employment regulations in Russia. Growth in these economies is expected to return to a more sustainable trajectory in 2025.
United States and Europe
Economic growth in the United States is projected to slow to 1.9 percent in 2025 from 2.8 percent in 2024, reflecting softer labor market demand and lower consumer spending.
Europe’s figures are expected to recover slightly, from 0.9 percent in 2024 to 1.3 percent in 2025. This will be supported by lower inflation and a resilient labour market, although fiscal tightening and longer-term challenges such as weak productivity growth and an aging population continue to weigh on the economic outlook.
Asia
East Asia is projected to grow by 4.7 percent in 2025, driven by robust growth in China at 4.8 percent and strong final consumption across the region.
South Asia is expected to remain the fastest growing region. GDP there will grow by 5.7 percent in 2025, led by strong growth in India’s GDP to 6.6 percent.
UN predicts growth in world trade.
World Economy
In 2025, the world economy will grow by 2.8 percent, the same as in 2024. The report, released today, highlights that while global economic activity has shown resilience in weathering a number of shocks, growth remains below the pre-pandemic average of 3.2 percent.
Lower inflation and continued monetary easing in many countries will help ensure a modest pick-up in global economic activity in 2025. However, uncertainty remains high, the UN says, pointing to risks from geopolitical conflicts, rising trade tensions and rising borrowing costs. These challenges are particularly acute for low-income countries.
“Countries cannot ignore these dangers. In our interconnected economy, shocks in one part of the world send prices higher in another. “Every country is involved in this problem and therefore must be involved in solving it,” UN Secretary-General António Guterres wrote in the foreword to the report.
Reviving global trade and easing monetary policy
Global trade is projected to grow by 3.2 percent in 2025, supported by rising Asian manufactured exports and robust services trade. However, trade tensions, protectionist policies, and geopolitical uncertainty pose significant risks.
Global inflation is projected to decline from 4 percent in 2024 to 3.4 percent in 2025. Major central banks are likely to continue cutting interest rates in 2025. Inflation in many developing countries will exceed recent averages, with double-digit inflation in one in five countries.
Debt Burden and Food Inflation
For developing countries, easing global financial conditions may help reduce borrowing costs, but access to capital will remain uneven. Many low-income countries continue to face high debt servicing costs and limited access to international financing.
Food inflation remains a serious problem for many developing countries.
The report stresses that governments should use any fiscal space created by monetary easing to invest in sustainable development, especially in critical social sectors.
Experts also note that despite the decline in global inflation, food inflation remains high, with rates exceeding 5 percent in almost half of developing countries in 2024. This has exacerbated food security concerns in low-income countries already facing extreme weather events, conflicts and economic instability. The report’s authors warn that prolonged food inflation, coupled with slow economic growth, could push millions of people into extreme poverty.
Investing in energy, infrastructure and the social sector
The report’s authors call for bold multilateral action to tackle the intertwined crises of debt, inequality and climate change. Monetary easing alone will not be enough to boost global growth or address rising social inequality.
Governments should avoid overly restrictive fiscal policies and instead focus on mobilizing investment in clean energy, infrastructure, and critical social sectors such as health and education.