Global Economic Report – June 16, 2025

This updated and all-inclusive report illustrates the global economy as of June 16, 2025. The report is based on the latest data from International Monetary Fund (IMF), Organization for Economic Co-operation and Development (OECD), World Bank, and other global financial institutions, as well as their analysis of the data. This report tracks updates for all regions, emerging risks, central banks and monetary policies, inflation trajectories, trade updates, labour market developments, technology transitions, and forecasts for the rest of 2025.

1. Global Economic Growth – Moderate but Uneven Recovery

By mid-2025, the global economy is still in a phase of moderate recovery. In the IMF’s mid-year update released on June 14, global GDP is estimated to increase by 3.1% in 2025. Polls of economists showed a modest increase from the previous projections due to resilient consumer spending and deemed fiscally responsible policies in both advanced and emerging markets.

While growth comes back to level, the stabilization is uneven:

Advanced economies are expected to grow 1.7%, with the Euro area trailing since their slowing manufacturing outputs.

Emerging and developing markets are expected to grow 4.4%, largely driven by Asia (with a specific spotlight on India, Vietnam and Bangladesh).

The OECD points out that despite the return of modest global growth there are still serious downside risks associated with continued geopolitical uncertainties, continued inflationary pressures, and climate-related volatility.

2. Regional Economic Updates

United States

U.S. Economy

The U.S. economy is proving to be resilient and is projected to grow 1.9% GDP growth. Inflation is easing to 3.2%, which is giving the Federal Reserve a chance to hold its benchmark interest rates steady for now. The labor market is showing strength, but job creation continues to slow. Growth in technology and services are continuing to drive growth and productivity-based improvements in corporations from AI are contributing to profits.

European Union

Growth in Europe is weak at 0.9%. Germany is now in a technical recession, the biggest economy in the bloc; as it is seeing weak exports and increased energy prices. France and Italy are seeing some modest growth in services, while the European Central Bank (ECB) is expected to remain cautious as inflation has stayed at about 4.5%.

China

China’s economic recovery continues to be fragile. The World Bank now estimates growth will be about 4.6% amid continued weakness in property and domestic consumption. The government did announce a stimulus of a little over $110 billion last week, focusing on infrastructure, green tech, and household consumption.

India

India, however, remains a bright spot in the world. It is expected to grow about 6.7% with robust domestic demand, strong and fast investment in the digital infrastructure, niche market/sector service exports, and expansion of foreign direct investment (including India).

Latin America

Latin America is projected to grow at 1.4%. Inflation is persistent in Brazil and Argentina; Mexico’s performance is better supported by nearshoring advantages and trade size with the U.S. Chile and Colombia have increased reform efforts to attract investments in green energy and technology.

Africa

Africa’s growth forecast is at 3.9% led by Nigeria, Ethiopia and Kenya. Regional economic integration as a result of the AfCFTA is starting to take effect. However, external debt and climate shocks are significant challenges in all three countries.

3. Inflation Trends and Central Bank Actions

Global inflation is slowly declining. The global average inflation is projected to be 4.3% in 2025.

United States Federal Reserve Board: The Board has not adjusted its interest rate policy; markets do not expect any rate cuts until Q4.

European Central Bank: The ECB is cautious because of service sector inflation and wage pressures.

Bank of Japan: The Bank is maintaining an ultra-loose policy because wage growth remains stagnant and inflation is low.

Emerging markets: Various mixed responses are evident. Egypt and Turkey have increased interest rates to combat currency depreciations.

Wage inflation and food prices remain volatile in many parts of the global economy.

4. Global Trade and Geopolitical Risks

Trade flows are shifting globally due, in part, to continuing geopolitical tensions and regional agreements.

U.S.-China trade talks reconvened in London on June 12. Neither party signed a deal during the one day session, but both agreed to continue discussions, which helped to alleviate some of the market’s anxieties.

The new tariffs imposed by the U.S. on semi-conductors and EVs from China remain points of contention in the discussions. China is certainly expected to retaliate.

Supply chain diversification continues to play a role, as India, Vietnam and Mexico all grow as alternative production bases.

Africa is ramping up trade with its intra-continental trading base through its AfCFTA agreement, too.

Experts have announced that the global economy may have lost an equivalent of $1.2 trillion by 2030 if the world remains fracture by any length of time.

5. Technology and AI: The Driving Force of Transformation

AI and automation are transforming global productivity in many ways:

Financial services: AI-enabled fraud detection, algorithmic trading, and robo-advisors are just a few examples of frictionless productivity applications that are becoming commonplace.

Healthcare: AI is enabling drug discovery and diagnostics to be completed faster than ever.

Retail and logistics: Personalization and warehouse automation are becoming more efficient.

The World Economic Forum published a report on June 13, asserting that AI will raise a global GDP by $1.5 trillion each year, by 2027.

And yet, there remain concerns regarding employment displacement, digital inequity, and regulatory policies. The G20 Summit to be held in Brazil in August 2025 will debate on global governance related to AI.

6. Labor Market and Future of Work

There’s transformation happening in the global labor market:

Remote work is here to stay for most jobs in the knowledge-based sectors. This further decreases the demand for office space in cities.

Youth unemployment is still at record highs, particularly in the MENA and sub-Saharan African regions.

Developed countries are ramping up their reskilling efforts to mitigate job losses from automation.

This month, Germany, Canada and South Korea all launched national AI-reskilling programs.

7. Climate and Economic Risk

Natural events with climate risks are still affecting global growth. In the first six months of 2025, damages reported from natural disasters amount to over $180 billion.

Agriculture: Extreme drought in Southern Africa and flash floods in Southeast Asia are disrupting food supply chains.

Energy: A growing amount of green hydrogen and battery storage investment is occurring. The EU launched a $60 billion green investment package on June 15.

Carbon pricing is gaining in popularity. Countries like Canada, Chile, and Japan have expanded their emissions trading systems.

8. Institutional Forecasts

IMF

Maintaining a global growth projection of 3.1%.

Advising prudence on fiscal policies and more public investment in digital and climate infrastructure.

OECD

Warning on increasing global inequality.

Stressing the need for multilateral cooperation in trade, tax and climate.

World Bank

Pointing out 45% of developing countries are at risk of debt distress.

Calling for broader access to concessional financing.

9. Future Economic Events

June 19: U.S. Fed meeting on the Q2 2025 interest rate outlook

June 25: EU economic indicators will be released probably shaping ECB policy

July 2025: BRICS Summit in Moscow on possible development bank expansion

August 2025: G20 Summit in Brazil on Artificial Intelligence governance and climate finance.

10. Conclusion

It is now mid-June 2025 and, despite the complexity of the world economy, signs of resilience can be seen. Inflation is cooling and several economies (notably in Asia) are progressing and thriving, but clearly significant risks remain through global trade fragmentation, geopolitical conflict, climate change, and AI-induced changes in labor.

Policymakers now need to respond decisively to provide stability and inclusive and equitable growth. Cross-border cooperation, green innovation, responsible AI deployment and targeted fiscal policy, will be needed to deal with the next wave of transformation to the world economy.