The global economy is poised for a moderate expansion of 2.7% in 2025-26, driven by easing inflation and monetary policy support. However, growth prospects are insufficient to offset damage from previous negative shocks.
Regional Trends
- East Asia and Pacific: Growth is projected to slow to 4.6% in 2025 and 4.1% in 2026.
- Europe and Central Asia: Growth will moderate to 2.5% in 2025 and 2.7% in 2026.
- Latin America and the Caribbean: Growth is forecast to increase to 2.5% in 2025-26.
- Middle East and North Africa: Growth is expected to pick up to 3.4% in 2025 and 4.1% in 2026.
- South Asia: Growth will remain high, averaging 6.2% in 2025-26.
- Sub-Saharan Africa: Growth is projected to strengthen to 4.2% in 2025-26.
Challenges Ahead
- Trade Policies: Heightened policy uncertainty and adverse trade policy shifts pose risks.
- Geopolitical Tensions: Escalating conflicts and potential trade wars threaten stability.
- Climate Change: More frequent extreme weather events impact economic activity.
Conclusion
The global economy is navigating a complex landscape. While growth is expected to stabilize, risks and challenges persist. Policymakers must balance economic support with risk management to ensure a resilient recovery.
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