Global Economic Forecasts: Q1 2025

Delivery

This report comes in PPT.

Key Findings

Global economy sees stable but modest growth prospects, with uncertainty on the rise

The global economy is expected to sustain its pace of expansion in 2025, supported by lower inflation and reduced interest rates, which would support private consumption and investment. The baseline outlook remains fragile, with rising downside risks stemming from heightened policy uncertainty. The potential escalation of protectionist policies, including higher tariffs, could intensify global trade tensions and weigh on growth prospects.

Growth outlook remains uneven between and across advanced and developing economies

Growth in advanced economies will be driven by the US, the fastest-growing market among the Group of Seven (G7). Economic prospects in the Eurozone will remain subdued despite some improvements. Lower interest rates and inflation are expected to bolster consumption, but trade policy uncertainty may constrain investment. Developing and emerging countries are projected to sustain solid growth rates in 2025, driven by strong domestic demand and government spending. China’s growth in 2025 may fall below its 2024 level, while other emerging Asian economies, such as India, Vietnam, and Indonesia, are poised to remain the bright spots in the global economy.

Global inflation will moderate further in 2025, but upside risks are significant

The global disinflation process is expected to reach a significant milestone in 2025, with inflation rates nearing central bank targets in many markets. Stable energy and food prices, coupled with a gradual cooling of labour markets and stagnating demand, are key factors keeping inflationary pressures in check. However, elevated trade policy uncertainty poses a significant upside risk to global inflation, as higher trade and investment costs could drive up consumer prices in 2025 and beyond.