Global Economic Outlook 2025: Optimism Amid High Uncertainty and Major Risks

Global Economic Outlook for 2025: Navigating Uncertainties



As we step into 2025, the global economic landscape presents a mixed bag of cautious optimism and looming uncertainties. The Association of Chartered Certified Accountants (ACCA) has released its second annual report titled 2025 Global Economic Outlook: A Highly Uncertain World, which sheds light on the expected growth trajectories, significant risks, and emerging economic trends affecting nations around the globe.

Economist Charles Goodhart offers his insights, underscoring the heightened uncertainty prevailing in today’s economy. He expresses a cautiously positive outlook for the United States, suggesting that it could perform quite well, while noting that Europe and the United Kingdom may face notable challenges. Goodhart also discusses inflation, predicting that it might decrease initially but warned of a potential surge back to higher levels in 2026 and 2027, particularly due to upward pressures in the U.S.

Key Factors to Monitor


The report flags three crucial trends to monitor in the global economy throughout 2025:
1. AI Developments: Advances in artificial intelligence have the potential to catalyze productivity breakthroughs, especially when integrated with existing technologies. However, the need for hybrid solutions and a balanced approach will be key for sustained economic benefits.
2. Geoeconomic Fragmentation: The shifting dynamics in US trade policies may instigate a reversal of globalization, which can have far-reaching implications for international trade and economic cooperation.
3. Green Policy Retreat: As nations grapple with rising cost-of-living issues and political transformations, existing commitments toward sustainability and environmental policies may face significant setbacks.

Perspectives from CFOs


The report contains interviews with chief financial officers (CFOs) from various industries and geographic regions. While there's an undercurrent of apprehension about global growth slowing, none of the CFOs foresee drastic contractions. Instead, businesses appear to be keeping an open eye on numerous risks, including geopolitical tensions, inflationary pressures, evolving trade policies, climate change concerns, and cybersecurity challenges.

A consistent theme across the conversations is the imperative for companies to embrace agility and resilience amidst this uncertain economic backdrop. The finance leaders acknowledge the role of AI, recognizing both its transformative potential and the accompanying uncertainties it introduces.

Conclusion


Jonathan Ashworth, ACCA's chief economist, emphasizes the importance of understanding how economic, political, and technological factors interplay in this unpredictable environment. The year 2025 stands poised to be one where adapting to challenges while seeking opportunities will be vital for businesses and policymakers alike, as the world navigates a complex and evolving economic landscape. For those interested in deeper insights, the full 2025 Global Economic Outlook report, featuring Goodhart's in-depth analysis, is available for download.

About ACCA


Founded in 1904, ACCA is a leading global professional accountancy organization, committed to advancing standards in accounting and finance worldwide. With over 252,500 members and 526,000 future members across 180 countries, ACCA champions diversity and inclusivity within the profession, supporting individuals in developing their expertise necessary for creating and protecting sustainable value in today’s dynamic economies.

Topics Financial Services & Investing)

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