The global economy is projected to continue its growth in 2025, aided by lower inflation and reduced interest rates that would bolster private consumption and investment. However, the baseline outlook remains fragile, facing increasing downside risks due to heightened policy uncertainty. The potential rise of protectionist measures, such as higher tariffs, could escalate global trade tensions and negatively impact growth prospects.

Growth in advanced economies will be led by the United States, which is expected to be the fastest-growing market among the Group of Seven (G7) nations. While there may be some improvements, economic prospects in the Eurozone are likely to remain subdued. Lower interest rates and inflation are anticipated to support consumer spending, although trade policy uncertainty could hinder investment. Developing and emerging countries are expected to maintain solid growth rates in 2025, fuelled by strong domestic demand and government spending. However, China’s growth in 2025 may be lower than its 2024 levels. In contrast, other emerging Asian economies, such as India, Vietnam, and Indonesia, are anticipated to continue being bright spots in the global economy.

The global disinflation process is anticipated to hit a significant milestone in 2025, with inflation rates approaching the targets set by central banks in many markets. Key factors contributing to this trend include stable energy and food prices, a gradual cooling of labour markets, and stagnating demand, all of which are helping to control inflationary pressures. However, elevated trade policy uncertainty presents a notable risk that could lead to higher global inflation. Increased trade and investment costs may increase consumer prices in 2025 and beyond.