New York: Europe and the Arabs
A leading UN report released on Thursday forecasts that global economic growth will remain at 2.8 percent in 2025, unchanged from last year. Despite showing some resilience in the face of a series of overlapping shocks, growth remains below the pre-COVID-19 average of 3.2 percent, reflecting weak investment, slowing productivity growth, and high debt levels. According to the UN News Bulletin, a copy of which we received this Friday morning, the report, entitled “World Economic Situation and Prospects 2025,” indicated that declining inflation rates and continued monetary easing in many economies may contribute to slightly stimulating global economic activity in 2025.

However, uncertainty remains high, due to the risks of geopolitical conflicts, rising trade tensions, and increasing borrowing costs. These challenges are most acute for low-income and fragile countries, where modest and fragile economic growth threatens to hinder progress towards achieving the Sustainable Development Goals.
In the introduction to the report, UN Secretary-General António Guterres said that countries cannot ignore these risks, adding: “In our interconnected economy, shocks on one side of the world raise prices on the other side.”
Mr. Guterres stressed the need for all countries to be part of the solution, and called for working together to make the new year one in which “we put the world on a path to a prosperous and sustainable future for all.”
Growth prospects vary
Economic growth in the United States is expected to slow in 2025 as the labor market shrinks and consumer spending declines. Europe may see a modest recovery supported by low inflation and strong labor markets.
As for East Asia, expectations indicate growth of 4.7 percent, driven by stable growth in China and increased private consumption, and according to the report, South Asia will remain the fastest growing region at 5.7 percent thanks to the expansion of the Indian economy by 6.6 percent.
The report also forecasts growth in Africa to rise from 3.4 percent in 2024 to 3.7 percent in 2025, driven by a recovery in major economies including Egypt, Nigeria and South Africa. However, challenges such as conflict, lack of job opportunities, high debt servicing costs and the effects of climate change weigh on Africa’s economic prospects.
Debt servicing burden and food inflation
The report noted that developing economies could benefit from easing global financial conditions to reduce borrowing costs. However, access to capital remains unequal, with many low-income countries facing high debt servicing burdens and challenges in accessing international financing.
Food price inflation also remains high, with nearly half of developing countries experiencing food inflation rates above 5 percent last year. This has exacerbated food insecurity in low-income countries, which are already suffering from extreme weather events, conflict and economic instability. The report warned that persistent food inflation, coupled with slow economic growth, could push millions of people into poverty.
A call for multilateral action
The report called for bold multilateral action to address the interconnected crises of debt, inequality and climate change. It stressed that monetary easing alone will not be enough to revitalize global growth or close widening gaps.
It stressed the need for governments to avoid overly restrictive fiscal policies and instead focus on mobilizing investments in clean energy, infrastructure and vital social sectors such as health and education.
The report said stronger international cooperation is also needed to manage the environmental, social and economic risks associated with critical minerals, which have the potential to accelerate sustainable development if managed responsibly. It said harmonized sustainability standards, fair trade practices and technology transfer are essential to ensure that developing countries can harness these resources responsibly and equitably.