By Sharon Atieno
With the global economic growth projected to remain at 2.8 percent in 2025, similar to 2024, there is need for bold multilateral action to address interconnected global crises. These include debt, inequality and climate change.
This is according to the World Economic Situation and Prospects (WESP) 2025 report which shows that despite withstanding a series of mutually reinforcing shocks, global economic growth has stagnated and remains below the pre-pandemic annual average of 3.2 percent.
The report produced by the United Nations Department of Economic and Social Affairs (DESA), highlights the enduring impact of weak investment, sluggish productivity, and high debt levels on global economic performance.
According to the report there is increased economic divergence among countries. The softening of labour markets and settling down of consumer spending is likely to slow down the economic growth of the United States in 2025.
In Europe, the recurring challenges such as weak productivity growth and an ageing population are likely to constrain its economic recovery despite easing inflation and resilient labour markets.
While in East Asia, the economy is projected to sustain relatively strong growth, supported by robust private consumption and stable performance in China, South Asia is poised to remain the fastest-growing region, driven by India’s continued economic expansion.
The report projects 1.5 percent improvement in growth in Western Asia in 2025, driven by improved prospects in Saudi Arabia and Türkiye, the region’s two largest economies. Economic performance in the region’s major oil-exporting countries is also forecast to improve in 2025 thanks to the easing of oil production cuts by Organization of the Petroleum Exporting Countries (OPEC) Plus. However, conflicts, persistent high inflation, and tight fiscal space will weigh negatively on the outlook for oil-importing countries in the region.
The report also predicts modest improvements in growth in Africa as a result of recoveries in major economies including Egypt, Nigeria, and South Africa. However, conflicts, rising debt-servicing costs and climate-related challenges weigh heavily on the region’s prospects.
Economic growth in the least developed countries (LDCs) is projected to rise to 4.6 percent in 2025—up from the 4.1 percent growth estimated for 2024. While international tourism recovery is likely to support the LDC growth, the report notes that conflicts and geopolitical tensions, particularly in Africa, deter the investment needed for stronger economic expansion. Additionally, rising external public debt leaves many LDCs at significant risk of debt distress.
The economies of the small island developing States (SIDS) are projected to grow by an average of 3.4 percent in 2025, down from 3.8 percent in 2024, as the initial boost from the recovery of international tourism continues to recede. However, extreme weather remains a key threat to this development.
On the other hand, inflation is projected to ease globally, declining to 3.4 per cent due to easing labour market pressures in developed economies and moderating international food and energy commodity prices.
However, many developing countries are expected to face persistent inflationary pressures, with one in five experiencing double-digit rates. High debt burdens and limited access to international financing will continue to hinder recovery.
The report notes that food inflation remains a pressing issue, with nearly one in two developing countries experiencing rates above five percent. Adverse weather conditions, particularly in parts of Africa and South and East Asia, have continued to impact many countries in 2024, inflicting damage to infrastructure and pushing up food prices. La Niña effects are expected to persist through early 2025, potentially impacting food security.
The report calls on governments to focus on investments in clean energy, infrastructure and critical social sectors such as health and education.
Stronger international cooperation is deemed essential for managing the risks and opportunities associated with critical minerals such as lithium and cobalt, ensuring that developing countries can benefit equitably and sustainably.
