IIF forecasts global economic growth to decelerate to 2.7 percent in 2025
Date
12/12/2024 6:18:47 AM
(MENAFN) The International Institute of Finance (IIF) forecasted on Wednesday that global economic growth will decelerate to 2.7 percent in 2025, down from 2.9 percent in 2024. This slowdown is expected to be driven by various factors, including ongoing geopolitical tensions and shifts in global policy. Although growth remains positive, the forecast suggests that both developed and emerging markets will experience slower economic activity over the next few years, with challenges ahead for many countries in maintaining momentum.
For mature markets, the IIF projected a decrease in GDP growth to an average of 1.3 percent in 2025, down from 1.5 percent in 2024. The US is expected to see a growth rate of 1.9 percent, while the euro area’s growth is forecasted at a much lower 0.6 percent. Emerging markets, on the other hand, are expected to fare somewhat better, with a growth rate of 3.8 percent in 2025. Among individual emerging economies, Russia’s growth is expected to be 1.7 percent, Türkiye’s at 2.5 percent, and China is expected to lead with 4.2 percent, reflecting its relative strength in the face of global challenges.
The IIF also highlighted a significant decline in capital flows to emerging markets, projecting a drop to USD716 billion in 2025, compared to USD944 billion in 2024. This decrease is primarily due to weaker investment flows into China, which experienced its first net foreign direct investment outflows in decades in 2024, with a similarly disappointing outlook for 2025. In addition, capital flows to non-China emerging markets are expected to moderate, falling to USD781 billion in 2025 from USD824 billion in the previous year.
Furthermore, the IIF noted that geopolitical tensions and US energy policies are likely to create additional uncertainty for commodity prices in the coming years. These factors will contribute to the volatility of energy markets, potentially impacting global trade and investment strategies.
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