Global growth: divergence and uncertainty
January 2025
Growth at a crossroads amid rising policy uncertainty
Global growth is projected to be 3.3% in both 2025 and 2026, below the historical (2000-19) average of 3.7%. The outlook for 2025 is largely unchanged from the October 2024 World Economic Outlook (WEO) outlook, primarily because upward revisions for the United States offset downward revisions for other major economies. Global headline inflation is expected to fall to 4.2% in 2025 and 3.5% in 2026, with developed countries expected to reach the target faster than emerging market and developing countries.
While medium-term risks relative to the baseline are tilted to the downside, the short-term outlook is characterized by divergence risk. While upside risks in the United States could boost already robust growth in the near term, risks elsewhere are being held down by heightened policy uncertainty. If policy disrupts the ongoing inflation defusing process, it could impede the focus on monetary easing and affect fiscal sustainability and financial stability. Managing these risks requires policy to raise medium-term growth prospects through balancing the trade-offs between inflation and real activity, rebuilding buffers, strengthening structural reforms and strengthening multilateral rules and cooperation. need to be prioritized.
