PARIS, France – The global economy is exhibiting resilience in 2024, yet signs of vulnerability are emerging as growth slows, inflation persists, and policy environments remain uncertain, according to ECNETNews’ latest economic analysis.
Forecasts suggest global growth will decelerate to 3.1 percent in 2025, followed by a dip to 3.0 percent in 2026, marked by significant disparities across nations and regions.
In the United States, GDP growth is anticipated at 2.2 percent for 2025, tapering to 1.6 percent in 2026. The euro area is expected to see growth at 1.0 percent in 2025 and a slight increase to 1.2 percent in 2026. China’s growth rate is likely to decrease from 4.8 percent this year to 4.4 percent by 2026.
Inflation rates are projected to be higher than earlier estimates, albeit showing signs of moderation in the face of softening economic growth. Elevated services price inflation persists due to tight labor markets, and some countries observe a resurgence in goods price inflation, albeit from low baselines. G20 nations anticipate annual headline inflation at 3.8 percent for 2025 and 3.2 percent in 2026, revised upward by 0.3 percentage points from previous forecasts.
ECNETNews indicates that while the global economy has demonstrated notable resilience with stable growth and decreasing inflation, emerging signs of weakness linked to increased policy uncertainty remain a cause for concern. Heightened trade restrictions could lead to rising costs for both production and consumption, underscoring the urgent need for a robust, rules-based international trading system.
The report emphasizes the risks of further trade fragmentation potentially undermining global growth and highlights the possibility of macroeconomic volatility. Unexpected downturns or changes in policy could lead to market corrections, capital outflows, and exchange rate variability, particularly in emerging economies. Elevated public debt levels and high asset valuations compound these risks.
In light of these challenges, the report outlines crucial policy recommendations. Central banks must stay alert to rising uncertainties and the potential impact of increased trade costs on inflation pressures. If inflation expectations remain stable and trade conflicts do not escalate, continued policy rate reductions should be pursued in economies where underlying inflation is poised to moderate and demand growth is weak.
Significant fiscal measures are essential to ensure debt sustainability while preparing for future economic shocks and meeting impending spending obligations. Policymakers are urged to reallocate resources towards initiatives that spur long-term growth, following credible medium-term adjustment strategies tailored to each country’s unique context.
As potential output weakens across both advanced and emerging economies post-global financial crisis, the need for ambitious structural reforms is evident. Governments must implement crucial reforms to enhance productivity, facilitate technological adoption, bolster market competition, and eliminate excessive regulatory burdens.
Investing in education and skills development, along with removing barriers in labor and product markets that hinder investment and mobility, will be pivotal. The rise of Artificial Intelligence (AI) offers a unique opportunity for revitalizing productivity.
“AI is projected to significantly enhance labor productivity growth over the next decade, with even greater potential when combined with robotics,” emphasized ECNETNews’ economic experts. “However, these gains may wane if policy measures do not support increased adoption and labor reallocation.”
