UN forecasts global economic growth to drop to 2.4% in 2025

16/05/2025 06:00 AST

The global economy is under growing pressure, with growth expected to slow to 2.4 per cent in 2025, down from 2.9 per cent in 2024, according to the UN's World Economic Situation and Prospects report.

The report also highlights slowdowns in major economies, including China, where the economy is projected to grow at 4.6 per cent, hit by weak consumer demand and continued property sector challenges. India's growth forecast for 2025 has been revised downward to 6.3 per cent, but it still remains one of the fastest-growing large economies.

In a press release issued on Thursday, the United Nations stated, "The global economy is at a precarious juncture, marked by heightened trade tensions and elevated policy uncertainty, according to the World Economic Situation and Prospects as of mid-2025. The recent surge in tariffs--driving the effective US tariff rate up steeply--threatens to raise production costs, disrupt global supply chains and amplify financial turbulence. Global GDP growth is now forecast at just 2.4 per cent in 2025, down from 2.9 per cent in 2024 and 0.4 percentage points below the January 2025 projection."

The release added, "China's growth is expected to slow to 4.6 per cent this year, reflecting subdued consumer sentiment, disruptions in export-oriented manufacturing and ongoing property sector challenges. Several other major developing economies, including Brazil, Mexico and South Africa, are also facing growth downgrades due to weakening trade, slowing investment and falling commodity prices. India, whose 2025 growth forecast has been revised downward to 6.3 per cent, remains one of the fastest-growing large economies."

The UN further said that the slowdown is broad-based, affecting both developed and developing economies. Growth in the United States is projected to decelerate significantly, from 2.8 per cent in 2024 to 1.6 per cent in 2025, with higher tariffs and policy uncertainty expected to weigh on private investment and consumption. In the European Union, GDP growth is forecast at 1.0 per cent in 2025, unchanged from 2024, amid weaker net exports and higher trade barriers.

United Nations Under-Secretary-General for Economic and Social Affairs Li Junhua warned that the tariff shock threatens to slow growth, cut export revenues, and worsen debt burdens--at a time when several economies are already struggling to invest in long-term, sustainable development.

"The tariff shock risks hitting vulnerable developing countries hard, slowing growth, slashing export revenues, and compounding debt challenges, especially as these economies are already struggling to make the investments needed for long-term, sustainable development," Junhua said.

The United Nations also highlighted that food inflation, which has been averaging over 6 per cent, is affecting low-income households, especially in regions like Africa, South Asia, and Western Asia.

"Food inflation, averaging above 6 per cent, continues to hit low-income households hardest, particularly in Africa, South Asia and Western Asia. Higher trade barriers and climate shocks are further amplifying inflation risks, underscoring the need for coordinated policies, combining credible monetary frameworks, targeted fiscal support and long-term strategies, to stabilise prices and shield the most vulnerable," the release said.

Times of Oman