The Global Economy in 2025

According to forecasts by the Organization for Economic Cooperation and Development (OECD), the global economy is expected to grow slightly faster in 2025 as inflation rates decline. However, this progress could be hindered if tariffs rise and governments fail to address budget deficits effectively.

The OECD’s quarterly report projects a 3.3% growth in the global economy for the upcoming year, marginally higher than the 3.2% forecast for 2024. This projection reflects a more optimistic outlook compared to earlier assessments, which doubted the stability of global economic growth.

The United States is expected to see a 2.4% growth rate, surpassing the earlier estimate of 1.6%. OECD Chief Economist Álvaro Pereira noted, “Growth remains robust. We are seeing significant resilience in the U.S. economy.” However, this optimism relies on the assumption that trade policies will remain unchanged, a scenario that seems unlikely as newly re-elected U.S. President Donald Trump has pledged to raise tariffs on imports.

High budget deficits in countries such as the U.S. and France pose additional challenges. Concerns over rising deficits during Trump’s second term have driven up yields on U.S. Treasury bonds, signaling heightened investor anxiety.

The OECD has urged central banks to lower key interest rates, albeit cautiously, to avoid triggering excessive increases in prices for goods and services. The U.S. Federal Reserve’s base rate is expected to decline from 3.25% to 3.5% by the first quarter of 2026, while the European Central Bank’s rate is anticipated to fall to 2% by the end of 2025.

India remains a standout performer in the global economy, continuing its impressive growth trajectory. China’s economy is also expanding, but challenges such as significant declines in real estate prices have tempered its momentum. Despite these hurdles, China is expected to grow by 4.5% in 2025, driven primarily by strong export performance, although domestic consumption remains weak.

The OECD has revised its growth projection for the United Kingdom upward to 1.7%, an improvement from the previous 1.2% forecast. In contrast, Germany’s growth forecast has been downgraded to 0.7% from an earlier estimate of 1%. Pereira emphasized the need for structural reforms to boost productivity, particularly in addressing gaps in digital infrastructure. This adjustment underscores the economic challenges facing Europe, which could face long-term setbacks without significant reforms.

While the global economic outlook for 2025 appears cautiously positive, significant challenges remain. Political and financial equity will be critical for ensuring stable and sustainable growth in the coming years.