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Global economic growth slows in 2025, emerging markets face decline in capital flows
(MENAFN)
Global economic growth is projected to slow to 2.7 percentin 2025, down from 2.9 percent in 2024, according to a forecast released by the International Institute of Finance (IIF) on Wednesday.
For advanced economies, the IIF predicts a modest GDP growth rate of 1.3 percent in 2025, down from 1.5 percent in 2024. In the US, growth is expected to be 1.9 percent, while the euro area is forecast to grow by only 0.6 percent. Meanwhile, emerging markets (EMs) are projected to see a growth rate of 3.8 percent, with individual forecasts of 1.7 percent for Russia, 2.5 percent for Turkey, and 4.2 percentfor China.
The IIF also noted a significant decline in capital flows to emerging markets, forecasting them to drop to USD716 billion in 2025 from USD944 billion in 2024. This decline is largely attributed to weaker capital inflows to China, which recently experienced its first net foreign direct investment outflows in decades, with similar trends expected in 2025. Additionally, capital flows to non-China EMs are expected to moderate to USD781 billion in 2025 from USD824 billion in 2024.
The report highlighted the ongoing uncertainty in commodity prices, driven by geopolitical tensions and shifting US energy policies, which are likely to add further volatility to global markets.
Global economic growth is projected to slow to 2.7 percentin 2025, down from 2.9 percent in 2024, according to a forecast released by the International Institute of Finance (IIF) on Wednesday.
For advanced economies, the IIF predicts a modest GDP growth rate of 1.3 percent in 2025, down from 1.5 percent in 2024. In the US, growth is expected to be 1.9 percent, while the euro area is forecast to grow by only 0.6 percent. Meanwhile, emerging markets (EMs) are projected to see a growth rate of 3.8 percent, with individual forecasts of 1.7 percent for Russia, 2.5 percent for Turkey, and 4.2 percentfor China.
The IIF also noted a significant decline in capital flows to emerging markets, forecasting them to drop to USD716 billion in 2025 from USD944 billion in 2024. This decline is largely attributed to weaker capital inflows to China, which recently experienced its first net foreign direct investment outflows in decades, with similar trends expected in 2025. Additionally, capital flows to non-China EMs are expected to moderate to USD781 billion in 2025 from USD824 billion in 2024.
The report highlighted the ongoing uncertainty in commodity prices, driven by geopolitical tensions and shifting US energy policies, which are likely to add further volatility to global markets.
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