The World Economic Situation and Prospects (WESP) 2025 report reveals 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 per cent.
The report, produced by the UN Department of Economic and Social Affairs (DESA), emphasizes the lasting impact of weak investment, sluggish productivity, and high debt levels on global economic performance.
UN Secretary-General António Guterres, in his foreword, calls for decisive action to tackle these challenges.
“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,” he stated.
Uneven path ahead
The United States is projected to experience a slowdown in 2025 as labor markets soften and consumer spending stabilizes, according to the report.
Meanwhile, despite easing inflation and resilient labor markets, Europe’s economic recovery remains limited due to ongoing challenges such as weak productivity growth and an aging population.
In East Asia, the economy is expected to sustain relatively strong growth, supported by robust private consumption and stable performance in China.
Conversely, South Asia is set to be the fastest-growing region, driven by India’s continual economic expansion.
In Africa, slight improvements in growth are expected, thanks to recoveries in major economies like Egypt, Nigeria, and South Africa. However, conflicts, increasing debt-servicing costs, and climate-related challenges weigh heavily on the region’s prospects.
Overall, global trade is forecasted to grow by 3.2 per cent in 2025, fueled by strong exports from Asia and a resurgence in services trade.
Furthermore, global inflation is projected to decline to 3.4 per cent, offering some relief to businesses and households.
© ADB/Lester V. Ledesma
Food inflation remains a pressing issue in many developing countries.
Challenges facing developing economies
However, many developing countries are expected to encounter persistent inflationary pressures, with one in five experiencing double-digit rates. High debt burdens and restricted access to international financing will continue to impede recovery.
Food inflation remains a pressing concern, with nearly half of developing countries experiencing rates above five per cent.
This has exacerbated food insecurity, particularly in low-income nations already dealing with extreme weather events, conflicts, and economic instability.
The report cautions that persistent food inflation, combined with slow economic growth, could push millions deeper into poverty.
Critical minerals: opportunities and risks
The increasing industrial demand for critical minerals, like lithium and cobalt, presents both opportunities and risks.
For resource-rich developing countries, these minerals offer the potential for growth, job creation, and increased revenues to expedite progress towards the 17 Sustainable Development Goals (SDGs).
Nevertheless, the report warns that poor governance, unsafe labor practices, and environmental degradation could jeopardize long-term benefits and exacerbate inequalities.
Advocating for comprehensive policies to ensure sustainable extraction and equitable benefit-sharing, DESA chief Li Junhua emphasized: “Critical minerals have immense potential to accelerate sustainable development, but only if managed responsibly.”
Call for bold multilateral action
The report concludes with a call for bold multilateral action to address intertwined global crises, including debt, inequality, and climate change.
Governments are urged to prioritize investments in clean energy, infrastructure, and critical social sectors such as health and education.
Robust international collaboration is deemed crucial for managing the risks and opportunities associated with critical minerals, ensuring that developing countries can benefit equitably and sustainably.
