Global Economic Report – June 10, 2025

This in-depth report provides a comprehensive overview of the global economy as of June 10, 2025. The report relies on analysis and information from a variety of authors and organizations, including the OECD, IMF, World Bank and leading financial news organizations to address economic growth, inflation, international trade, technological developments, labor impacts, and regional inputs. The purpose of this report is to provide a comprehensive assessment of the current economic environment for all stakeholders (governments, firms, and investors), and to establish various scenarios for anticipation of challenges.

1. Global Economic Growth: An Unstable Environment

Global economic growth in 2025 shows mixed trends. According to the OECD, worldwide GDP is expected to increase 2.9% in 2025 compared to 3.3% in 2024. The report identifies the deterioration in growth rates to be caused by tight monetary policy, trade conflict including retaliatory tariffs, and the unstable geopolitical environment. While developed countries, on average, are slower or stagnant due to wage and operational cost spikes, emerging country economies (especially in Asia), continue to grow vigorously.

Although IMF will publish fresh global growth predictions in October, (we expect them to follow similar regional patterns), they forecast worldwide GDP growth of 3.2% in 2025 with 1.8% in advanced economies and 4.2% in developing nations. The stronger growth forecast for developing nations is thereby attributed to domestic demand expansion and recovery in large emerging countries (India and Indonesia). Consequently, we also agree with the World Bank’s observation that: “the economy is fragile, but stabilizing” for developing nations, which aligns with our finding of increasing inequity between economies in high-income and low-income nations.

2. Regional Economic Highlights

United States

The U.S. economy is expected to grow at 1.6%. While inflation is coming down, elevated interest rates and tight credit conditions are putting a damper on consumer spending, as well as private investment. Labor markets remain robust, though the pace of income or wage growth has slowed. Sectors like tech, as well as manufacturing, are experiencing modest rebounds.

European Union

The EU is projected to have modest growth of just above 1%. Germany and France are dealing with flat output in manufacturing, while Southern Europe continues to see growth in tourism and services. Further, energy prices are still uncertain and high, contributing to inflation and inefficiencies in the industrial space.

China

Growth in China is slowing to 4.7% down from 5.1% in 2024. The country is dealing with a prolonged slump in the property sector, a decline in foreign direct investment, and lower than anticipated retail sales. The government is deploying fiscal and monetary stimulus aimed at specific sectors of the economy – the introduction of electric vehicle subsidies and infrastructure spending.

India

India continues to outperform expectations with a projection of 6.5% growth. Its economic growth is on track due to solid domestic consumption, an improving digital infrastructure, and a growing manufacturing base as part of the “Make in India” initiative. Foreign investment is also seeing an increase, as investor confidence grows alongside improvements to the regulatory environment.

Latin America

Latin America is projected to grow at 1.2%. Brazil and Argentina have to contend with high inflation and difficult fiscal adjustments. Mexico is still heavily dependent on US trading partners, but looking to broaden those horizons through potential regional trade deals.

Africa

Sub-Saharan Africa is expected to project 3.8% growth, with Nigeria and Kenya showing signs of initial development. In its entirety, climate risk, political instability, and external debt still hinder progress and development. There is optimism with investments in renewable energy and modernization of agriculture.

3. Inflation and Central Bank Policy

Inflation is decreasing the world over. The global average is projected to decrease from 6.1% in 2024 to 4.5% in 2025. That said, core inflation is proving to be sticky – especially, in services and housing.

• U.S. Federal Reserve Bank: The Fed is on pause for rate hikes and is holding the Fed target rate while they monitor inflation which continues to be sticky. A 2% inflation target remains the long-term goal.
• European Central Bank: Inflation is now below 5%; however, the ECB is being cautious due to energy price volatility, and labor negotiations.
• Emerging Markets: Many have high realized inflation for food and energy. Countries impacted by currency devaluation, increasing inflation, and tightening monetary policies; i.e., Turkey, Argentina, and Egypt continued; inflation will continue to dampen consumption as employment becomes more challenging.

4. Trade and Geopolitical Tensions

Trade dynamics and policies are shifting in reaction to both protectionist developments and the ongoing geopolitical conflict. U.S. and China are set to meet in London on June 12, 2025, to recommence trade talks in order to resolve tariff disputes and stabilize supply chains.

New U.S. tariffs on Chinese electric vehicles and semiconductors have already drawn retaliatory measures from China, and many respected economists have warned that a protracted trade conflict will decrease global GDP growth by 0.3% per year.

At the same time, regional trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Asia and the African Continental Free Trade Area (AfCFTA) in Africa, among others, are becoming increasingly consequential. The agreements seek to lessen reliance on established global economic powers and strengthen regional economic integration.

5. Labor Markets and the Workforce of the Future

Remote and Hybrid Work

Remote work remains prevalent in technology, finance, and professional services. This change has affected commercial real estate and urban design.

Youth Employment

Youth unemployment is of concern – especially in Africa and the Middle East, where it is substantially higher than 20%. The governments are also moving to provide vocational training, digital skills training, and entrepreneurship to fill the gap.

Automation and AI Disruption

Artificial intelligence is dramatically changing the labor market. Klarna, one of the largest fintech firms, has recently replaced 700 customer service positions with AI technologies resulting in a cost savings of $40 million per year. While higher productivity should be desired, job displacement is a growing concern, one that will require new social safety networks and a new deployment of labor and training.

6. Technology and AI- Economic Influencer

Artificial intelligence is a critical indicator of workforce transformation. The World Economic Forum states AI could add $15 trillion to the global GDP by 2030.

• Finance: AI is enhancing fraud detection, trade execution, and servicing customers using robo-advisors.
• Retail: Assisted marketing that uses consumers’ past AI engagement is creating and expanding e-commerce. New automation is providing better logistics and stock controls.
• Healthcare: Diagnostic algorithms, robotic surgeries and drug-discovery platforms are changing how care is delivered.
• Risks: Privacy issues, cybersecurity, and misinformation will only become larger challenges. Regulations are still in their infancy around the needed frames of reflection.

7. Climate Change and Economic Adaptation

Climate change poses a long-term economic risk. In 2024 alone, 307 natural disasters caused more than $300 billion in global losses.

• Agriculture: Droughts and floods are affecting crop productivity, most notably in Africa and Southeast Asia.
• Energy: The transition to green energy is speeding up. The United States and the EU are leading the way in investment in solar, wind, and battery storage.
• Policy frameworks: Carbon pricing, green bonds, and international climate funds are being ramped up to support sustainable development.

8. Institutional Forecasts and Recommendations

OECD
Has issued a warning that trade protectionism and geopolitical fragmentation could mean a loss of up to $1 trillion in global output every year. Emphasizes a need for coordination in policy.

IMF

Keeps the global growth forecast at 3.2%. States that gained fiscal buffers should be rebuilt, and it would be better to manage debt sustainably.

World Bank

Investment in digital infrastructure, education and healthcare is encouraged. Resilience is stressed, especially in low-income nations.

9. Outlook for the next few months

There are a number of important $(a) developments that will shape the second half of 2025. Among them will be:

June 12, 2025: For a second time, U.S.-China trade negotiations will continue in London.

July 2025: An ECB policy update will take place and it is anticipated it will address inflation developments and wage pressures.

August 2025: The G20 Summit will occur in Brazil, with a focus on AI governance, global taxation, and climate financing.

Q3 and Q4: In emerging markets, we will see a focus on elections, debt restructuring, and digital innovation strategies.

10. Conclusion

Despite predictions of an imminent global economic recovery, conditions in mid-2025 remain polarized and the future uncertain. Inflation has diminished within the average range of 2% to 4% and some regions are witnessing growth and confidence return but a multitude of problematic uncertainties exist that range from trade frictions, disruptive technology (AI and innovation), climate risks and possibilities of inflation returning.

To succeed in navigating a return to deepening uncertainty, unlikely investment prospects, ‘smarter’ government finances, multilateral collaboration, and radical systemic innovation will be foundational. In a seemingly complex environment, awareness of the global – multiplier/multiplier induced effects, adaptability in the presence of contrarian signals, and systemic collaboration will be key for governments, central banks and investo.