Trade tensions, geopolitical risks to weigh on 2025 world economy – UN

SINGAPORE (ICIS)–Global economic growth is projected to remain at 2.8% in 2025, unchanged from 2024, weighed by trade tensions spurred by the incoming Donald Trump administration in the US as well as geopolitical risks, according to a United Nations (UN) report.

The US and China – the world’s biggest economies – are projected to grow at a slower pace but will be offset by modest recoveries in the EU, Japan, the UK, as well as robust performance in India and Indonesia, the UN World Economic Situation and Prospects 2025 report stated.

The UN estimates China’s economic growth at 4.9% in 2024 and 4.8% in 2025; while the US’ 2024 GDP growth is expected at 2.8%, which will slow down to 1.9% this year amid “weaker labor market performance, modest income growth, and looming cuts in public spending”.

“Despite continued expansion, the global economy is projected to grow at a slower pace than the 2010–2019 (pre-pandemic) average of 3.2%,” according to the report released on 9 January.

Challenges such as weak investment, slow productivity growth, high debt levels, and demographic pressures continue to weigh on economic growth.

Various uncertainties and downside risks continue to cloud the near-term economic outlook as well, notably geopolitical tensions and rising trade and technological tensions, the report said.

Global trade volume is projected to grow by 3.2% in 2025, subject to these growing uncertainties, the UN added.

The incoming Trump administration and his ‘America First’ policies, which include tariffs levied on all foreign goods, will be a major source of uncertainty in the near-term.

Global inflation has continued its downward trend, with headline inflation projected to continue easing to 3.4% in 2025 from 4.0% last year and 5.6% in 2023, according to the UN report.