The UN Department of Economic and Social Affairs recently released the World Economic Situation and Prospects 2025. The report highlights the global economic outlook for the coming year, including the prospects for growth and where challenges may hinder progress.
The report indicates that global economic growth is projected to remain at 2.8% in 2025, unchanged from 2024. This growth rate is below the pre-pandemic average of 3.2%, constrained by weak investment, sluggish productivity growth, and high debt levels. Despite lower inflation and ongoing monetary easing in many economies, significant uncertainties remain, including geopolitical conflicts, trade tensions, and elevated borrowing costs.
The necessity of robust economic growth is underscored by the need to achieve the Sustainable Development Goals (SDGs). Economic growth is essential for reducing poverty, improving living standards, and creating jobs. However, the report emphasizes that growth must be inclusive and sustainable to address the challenges posed by climate change and social inequalities.
Key challenges facing the global economy
The report identifies several key challenges that continue to impact the global economy. Rising geopolitical tensions are affecting global trade and investment, creating uncertainties that hinder economic growth. Ongoing trade disputes and protectionist policies are disrupting international trade flows, impacting economic stability. Elevated borrowing costs and high debt burdens are particularly problematic for low-income and vulnerable countries, threatening their economic stability and progress towards the SDGs,
Regional economic outlooks
Different regions are experiencing varied economic conditions. In Europe, the European Central Bank (ECB) has published its climate and nature plan for 2024-2025, focusing on green investment needs and transition risks. European economies are striving to balance growth with sustainability, addressing climate change while fostering economic resilience.
Developing countries in Asia are leveraging the demand for critical minerals to boost growth and create jobs. These countries are capitalizing on the global shift towards renewable energy and electric vehicles, which require minerals like lithium and cobalt. African economies face challenges related to governance, environmental degradation, and over-reliance on volatile commodity markets. Efforts are being made to diversify economies and improve governance to foster sustainable development.
Opportunities for sustainable development
Despite the challenges, there are opportunities for growth and sustainable development. The rising global demand for critical minerals such as lithium, cobalt, and rare earth elements presents a unique opportunity for resource-rich developing countries to boost growth, create jobs, and increase public revenues. Proper management of these resources can accelerate progress towards the SDGs and reduce poverty and inequality.
The report emphasizes the importance of responsible management of critical minerals to avoid risks such as poor governance, unsafe labor practices, and environmental degradation. Sustainable development practices can help mitigate these risks and ensure long-term economic gains.
Summary
The world economic situation in 2025 is marked by resilience in the face of multiple shocks, but growth remains subdued and below pre-pandemic levels. Addressing the challenges of geopolitical conflicts, trade tensions, and high debt levels will be crucial for achieving a stable and equitable global economy. Leveraging opportunities such as the demand for critical minerals can help drive sustainable development and support the transition to a low-carbon future.
The report underscores the importance of global cooperation and prudent policies to lift growth and place it on a stable and equitable pathway that can accelerate progress towards the SDGs. As António Guterres, Secretary-General of the United Nations, stated, “Countries cannot ignore these perils. In our interconnected economy, shocks on one side of the world push up prices on the other. Every country is affected and must be part of the solution—building on progress made. Together, let’s make 2025 the year we put the world on track for a prosperous, sustainable future for all”.
