Global energy and resource as highlighted, easing inflation and looser monetary policies in several economies could provide a modest lift to global economic activity in 2025. Nonetheless, uncertainty remains significant, with risks stemming from geopolitical tensions, rising trade frictions, and higher borrowing costs in numerous regions. These issues are particularly pressing for low-income and vulnerable nations.

The UN projects that economic growth in the United States will decelerate from 2.8% in 2024 to 1.9% in 2025, reflecting a weakening labor market and slower consumer demand.

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Europe is anticipated to experience moderate recovery, Global energy and resource with GDP growth rising from 0.9% in 2024 to 1.3% in 2025, supported by lower inflation and stable labor markets. However, fiscal tightening and long-term structural issues—such as sluggish productivity gains and an aging population—continue to weigh on the region’s economic prospects.

East Asia’s economy is expected to expand by 4.7% this year, led by China’s steady growth (4.8% year-on-year) and strong private consumption.

South Asia is projected to remain the fastest-growing region in 2025, Global energy and resource with growth forecasted at 5.7% year-on-year, primarily driven by India, whose GDP is expected to rise by 6.6% year-on-year.

The UN forecasts that global trade will increase by 3.2% in 2025, slightly below the 3.4% growth projected for 2024. Nevertheless, trade policy tensions and geopolitical uncertainties continue to pose potential risks.

According to earlier GMK Center reporting, the Organization for Economic Cooperation and Development (OECD) expects global GDP to grow by 3.2% year-on-year in both 2024 and 2025, supported by steady trade expansion, higher real incomes, and more accommodative monetary policies in many countries.

Geopolitical tensions remain high, Global energy and resource driven by ongoing conflicts in the Middle East, the prolonged war between Russia and Ukraine, and a marked cooling of relations between Western democracies and China,” the report stated.

“These factors are occurring simultaneously, adding layers of complexity and uncertainty to the global environment,” it continued. “In such a volatile context, political developments carry increased significance.”

The IIF highlighted that the US general election in November is the most consequential political event globally this year, as its results could have wide-ranging effects on both domestic and international policies, influencing areas from trade to military engagements.

The association of international financial institutions also noted that global economic growth is expected to slow, largely due to weaker performance in major economies such as the US and China.

“In the United States, the impact of the Federal Reserve’s past aggressive monetary tightening is anticipated to slow corporate hiring, limit household income growth, and reduce consumer spending,” the report said.

Although the IIF forecasts that US inflation will decline significantly to around 2.4% this year, Global energy and resource down from 3.7% last year, it warned that inflationary pressures persist in the largest economy, particularly in the services sector and wage growth, which may keep inflation slightly above the target.

The IIF anticipates that the Fed will implement two additional 25-basis-point rate cuts in November and December.

“Similarly, China’s economic momentum has weakened, with recent data showing a broad-based slowdown across key sectors,” the report noted.

The association projects China’s economic growth to slow to 4.7% in 2024, down from 5.2% in 2023, due to continued weakness in domestic demand, particularly in consumer spending and the real estate sector, which have struggled to gain traction despite policy support.

“Nevertheless, the Chinese government is expected to introduce further fiscal stimulus and additional monetary easing in the second half of 2024 to support growth, aiming to keep the economy near its official target,” the report added.

“While these efforts may help stabilize activity, structural challenges such as an aging population, high youth unemployment, and ongoing tensions with the United States are likely to limit China’s medium-term growth potential,” it concluded

In its latest World Economic Outlook (WEO) report released on July 23, the International Monetary Fund (IMF) once again revised down its global growth projections for 2019 and 2020. The IMF now estimates that the world economy will expand by 3.2% in 2019 and 3.5% in 2020, which is 0.1 percentage points lower than the WEO forecast published in April for the current and following year.

For advanced economies, the IMF anticipates growth of 1.9% in 2019 and 1.7% in 2020, with the 2019 forecast being 0.1 percentage point higher than the April estimate. Meanwhile, emerging and developing economies are projected to grow by 4.1% in 2019 and 4.7% in 2020, marking a reduction of 0.3 and 0.1 percentage points, respectively, from April. The IMF expects China’s economy to expand by 6.2% in 2019 and 6.0% in 2020.

Revised Growth Forecasts for Advanced Economies, the U.S., and Europe in 2019

The IMF cited persistent weakness in global economic activity as the main reason for the downward adjustment in growth expectations. “The GDP figures released so far, along with generally lower inflation, indicate that global economic performance is weaker than anticipated,” the report noted.

However, the WEO slightly increased the growth forecast for advanced economies in 2019 by 0.1 percentage point to 1.9% while keeping the 2020 projection at 1.7%. According to the IMF, this upward revision primarily reflects stronger-than-expected growth in the United States.

Specifically, the IMF raised its U.S. growth forecast for 2019 by 0.3 percentage points to 2.6%, although growth is expected to slow to 1.9% in 2020 as fiscal stimulus fades. “The 2019 adjustment reflects the U.S. economy’s better-than-expected performance in the first quarter,” the IMF explained. Despite robust export performance and inventory accumulation supporting overall growth, domestic demand and imports were slightly weaker than anticipated, partially due to tariffs.

Earlier in 2019, the IMF had lowered its growth forecasts for the eurozone twice in January and April, citing weaker economic performance as the main reason behind the overall decline in advanced-economy growth. For 2019, the IMF now projects eurozone growth at 1.3% and 1.6% in 2020, representing a 0.1 percentage point upward revision. The IMF noted that external demand in the eurozone is expected to improve, and temporary disruptions such as fewer car registrations in Germany and street protests in France are expected to diminish.

Despite this, Germany’s growth forecast for 2019 was slightly lowered due to weaker-than-expected external demand, which is dragging on investment. Economic projections for France and Italy remain unchanged, with the IMF noting that French fiscal measures are supporting growth while the negative impact of protests is fading. Italy’s uncertain fiscal situation continues to weigh on investment and domestic consumption.

The European Commission’s Summer 2019 Economic Forecast is even more pessimistic than the IMF’s, predicting that the EU and eurozone economies will grow by only 1.2% and 1.4%, respectively, in 2019—far below the 1.9% and 2% recorded in 2018, which would mark the lowest growth since 2015.

Broad Downgrades in Emerging Market Growth

The IMF also broadly lowered its growth projections for emerging and developing economies, now expecting expansion of 4.1% in 2019, accelerating to 4.7% in 2020. Compared with the April estimates, this represents a reduction of 0.3 percentage points in 2019 and 0.1 percentage point in 2020.

The IMF predicts that emerging and developing Asia will expand by 6.2% in 2019–2020, a slight decline of 0.1 percentage points compared with the April WEO forecasts. According to the IMF, this moderation is largely due to the effects of tariffs on trade and investment.

The WEO anticipates China’s economy will grow by 6.2% in 2019 and 6.0% in 2020. Earlier, Gian Maria Milesi-Ferretti, deputy director of IMF Research, told First Financial Journalists during the IMF and World Bank Spring Meetings that China remains optimistic about its economic performance this year and next.

For other emerging regions, the slowdown is driven mainly by Turkey, where economic activity is expected to continue contracting. Growth prospects for emerging and developing Europe are weak, with the IMF projecting 2.3% growth in 2020, down 0.5 percentage points from April’s WEO. In Latin America, the IMF now expects 0.6% growth in 2019, a decline of 0.8 percentage points from the April forecast, and a rebound to 2.3% in 2020.

Further Easing of Global Financial Conditions

The IMF also highlighted that over the past three months, global financial markets have faced two major challenges. First, investors are increasingly worried about the effects of rising trade tensions and a deteriorating global economic outlook. Second, market participants are adjusting their expectations regarding how these tensions could influence future monetary policy.

Since mid-June, many central banks worldwide have indicated a shift toward a more accommodative monetary stance, citing heightened downside risks to growth and low inflation. The Federal Reserve’s projected interest rate path has been lowered, while the European Central Bank extended its forward guidance to maintain current rates through mid-2020 and beyond. Other central banks—including those in Australia, Brazil, Chile, China, India, Malaysia, and the Philippines—have also adopted a more dovish tone or signaled a cautious approach regarding future policy.

“This has prompted a reassessment of expected monetary policy paths. Currently, investors anticipate further easing by central banks,” the IMF said. Overall, these developments have contributed to a further loosening of global financial conditions since the April WEO.

The IMF noted that this easing is particularly pronounced in the United States and the eurozone, while the net change in China’s financial conditions and the overall adjustment in other major emerging markets remains minimal.