Global economic growth punctuated by divergence, uncertainties

Economic growth is highly significant for countries around the world because it drives prosperity, improves living standards, and strengthens national stability.
Growth leads to increased income, better job opportunities, and improved access to essential services like healthcare, education, and infrastructure.
A growing economy creates employment and raises incomes, helping lift people out of poverty and reducing income inequality. It encourages businesses to innovate, increasing efficiency and global competitiveness.
Economic growth contributes to stability by reducing unemployment and social unrest while strengthening a country’s global influence.
The global economy is holding steady, although the degree of grip varies widely across countries, according to the International Monetary Fund.
Global growth is projected at 3.3% both in 2025 and 2026, below the historical (2000–19) average of 3.7%, IMF said in its latest outlook.
The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies.
Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.
Medium-term risks to the baseline are tilted to the downside, while the near-term outlook is characterised by divergent risks.
Upside risks could lift already-robust growth in the United States in the short run, whereas risks in other countries are on the downside amid elevated policy uncertainty, IMF noted.
Policy-generated disruptions to the ongoing disinflation process could interrupt the pivot to easing monetary policy, with implications for fiscal sustainability and financial stability. Managing these risks requires a keen policy focus on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth prospects through stepped-up structural reforms as well as stronger multilateral rules and cooperation.
Growth in China, at 4.7% in year-over-year terms, was below expectations.
Faster-than-expected net export growth only partly offset a faster-than-expected slowdown in consumption amid delayed stabilisation in the property market and persistently low consumer confidence. Growth in India also slowed more than expected, led by a sharper-than-expected deceleration in industrial activity.
Growth continued to be subdued in the euro area (with Germany’s performance lagging that of other euro area countries), largely reflecting continued weakness in manufacturing and goods exports even as consumption picked up in line with the recovery in real incomes.
In Japan, output contracted mildly owing to temporary supply disruptions. By contrast, momentum in the United States remained robust, with the economy expanding at a rate of 2.7% in year-over-year terms in the third quarter, powered by strong consumption.
Global disinflation continues, but there are signs that progress is stalling in some countries and that elevated inflation is persistent in a few cases.
Nominal wage growth is showing signs of moderation, alongside indications of continuing normalisation in labour markets.
However, sustainable growth is key. If unchecked, rapid economic expansion can lead to environmental degradation, inflation, and income disparities.
That’s precisely why many countries now focus on inclusive and sustainable growth, balancing prosperity with environmental and social responsibility.