Euromonitor International’s recent webinar, Economic Outlook for 2025, explored key trends shaping the global economy. While the global economy has shown signs of stabilisation over the past two years, rising geopolitical risks and economic uncertainty will continue to shape the global economic landscape in 2025.
Euromonitor International has received a significant number of questions, not all of which could be addressed during the live Q&A session. Some of the highlights are provided below.
How will ongoing global challenges shape the global economy in 2025?
The global economy in 2025 is set to experience a modest recovery, shaped by both supportive and challenging factors. Easing inflation and the momentum of monetary easing cycles are expected to drive improvement. However, persistent geopolitical risks and structural adjustments constitute significant headwinds.
Global real GDP growth is forecast at 3.2% in 2025, matching 2024 levels but remaining below the pre-pandemic trend. While disinflation is predicted to continue, with global consumer price growth projected to fall to 3.8%, upside risks to inflation remain. Potential disruptions, such as a slower disinflationary process, could lead central banks to delay interest rate cuts, adversely affecting growth.
What are the potential economic and geopolitical implications of a second Trump presidency?
The second Trump presidency and proposed trade protectionism could have significant economic consequences. For the EU, US tariffs on European goods may slow GDP growth in the region by limiting export opportunities and increasing production costs. Similarly, China could face headwinds, particularly as higher tariffs disrupt its export-driven economy, although domestic stimulus and market diversification may mitigate impacts. The US might see initial growth from fiscal policies but could encounter medium-term pressures. Protectionism would be likely to increase inflation in the US as higher tariffs raise consumer prices, compounded by wage pressures from stricter immigration policies.
Europe’s strategic response may begin with further integration of the EU’s Single Market, alongside prioritising supply chain diversification and bolstering investment in domestic industries. Additionally, strengthening trade partnerships with non-US economies will be pivotal in mitigating potential losses. The recently signed EU-Mercosur agreement exemplifies this approach, highlighting the EU’s commitment to expanding its global trade network.
An import tariff for Canada and Mexico – whether 25%, as proposed by President-elect Donald Trump, or a lower rate – could hinder the growth of industries heavily dependent on US trade. For Mexico, this would primarily affect the machinery, electrical equipment and transportation sectors, which together accounted for over 60% of the country’s exports in 2023. In Canada, such a tariff could disrupt exports of mineral products, the country’s largest export category, particularly affecting its crude oil, natural gas and electricity production sectors.
Overall, Trump’s protectionist stance could stifle global economic integration, challenge supply chain efficiency, and create growth bottlenecks for both advanced and emerging economies.
Where do opportunities lie for consumer spending in 2025?
Consumer spending is predicted to increase gradually in 2025, with moderating inflation, interest rate cuts across major economies and rising real disposable incomes contributing to a more optimistic outlook. While caution persists, due to global uncertainties and the lingering effects of inflation and still-high borrowing costs, consumer sentiment is steadily improving in many markets.
As financial pressures gradually ease, consumer spending is likely to shift towards more discretionary categories. Areas with increasing growth potential include household goods, beauty and personal care, alcoholic beverages and communications, reflecting a cautious and selective increase in spending.
What is the economic outlook for emerging Asia, Latin America and sub-Saharan Africa?
The overall outlook for emerging and developing economies is positive, but marked by divergences across regions and markets. Real GDP growth in developing economies is projected to stabilise at around 4.1% in 2025. Emerging Asia remains a bright spot, with growth projected at 5.1%, fuelled by surging demand for electronics and semiconductors, and robust investment driven by supply chain diversification efforts. However, momentum continues to cool from the highs of 2023, as the post-pandemic surge fades.
The economic outlook for sub-Saharan Africa is cautiously positive, with real GDP growth projected at 4.1% in 2025, driven by increasing investment and private sector recovery. However, elevated inflation, high debt servicing costs, regional political and social instability, and external vulnerabilities pose major risks.
In Latin America, real GDP growth is projected to recover slightly, reaching 2.4% in 2025, but the picture is mixed. For instance, Brazil’s growth is predicted to ease to 2.1%, as restrictive monetary policy, reaccelerating inflation and a cooling labour market weigh on momentum. Meanwhile, Mexico’s outlook is more subdued, amid tighter fiscal and monetary policies, and risks of rising trade tensions or tariffs under the Trump administration.
What impact will AI developments have on the global economy in 2025?
Digital technology, particularly AI, is predicted to support global economic growth by driving productivity gains and enabling value creation across diverse industries. Advanced analytics and AI-powered automation are expected to optimise resource allocation, streamline operations, boost innovation and reduce labour costs. Over 61% of companies globally believe that AI will affect their business in the next five years, according to the Euromonitor International’s Voice of the Industry survey (N=767), underscoring its transformative potential across sectors and geographies.
Countries benefiting from investment in the production of electronics, AI infrastructure and education, or exporting critical materials, are poised for enhanced GDP growth. Conversely, nations unable to capitalise on these trends risk falling behind, potentially exacerbating global economic inequalities.
For further information, watch Euromonitor International’s webinar on demand Economic Outlook for 2025: Global Forecasts and Insights and read our quarterly updated report Global Economic Forecasts: Q4 2024.