Global Economic Growth To Be Stable, Inflation Lower To 4.4 Pct In 2025

KUALA LUMPUR, Oct 18 (Bernama) -- The global economic outlook is expected to improve steadily next year, which will indirectly help boost trade and local demand for goods and services.

According to the Ministry of Finance (MoF) in its Economic Outlook 2025 report released today, global growth is projected at 3.3 per cent next year owing to a convergence of growth among developed economies and steady growth in the emerging markets and developing economies (EMDEs).

The MoF said the advanced economies are expected to grow by 1.8 per cent, with the United States (US) gross domestic product (GDP) growth projected at 1.9 per cent as consumption and the labour market slow down.

Meanwhile, EMDE growth is projected to remain stable at 4.3 per cent with China's economy expected to grow by 4.5 per cent due to sluggish productivity growth, according to the ministry.

The report also stated that global trade growth is expected to grow by 3.4 per cent due to an upswing in trade activities among advanced economies and EMDEs, with projected growth of 2.8 per cent and 4.5 per cent respectively.

Global inflation is expected to further decrease to 4.4 per cent, with the advanced economies

and EMDEs forecast at 2.1 per cent and 6.0 per cent respectively following lower energy prices and the gradual cooling effects of the labour market, it said

Meanwhile, for this year's outlook, the global economy is projected to stabilise at 3.2 per cent as growth in major economies become more aligned.

According to the report, growth in advanced economies is expected to remain at 1.7 per cent with the US economy expected to grow by 2.6 per cent, owing to continued consumer spending.

While EMDE growth is estimated at 4.3 per cent, supported by sustained consumption and exports in Asia with China's economy expected to grow at a rate of 5.0 per cent, bolstered by consumer spending and exports.

The MoF said world trade is expected to gain momentum in line with steady economic growth, registering 3.1 per cent this year backed by strong trade activities, especially in technology-related sectors.

While global inflation, it added, continued to show signs of abating and was expected to soften to 5.9 per cent as energy prices and the labour market moderate.

However, the MoF said inflation was estimated to remain higher among EMDEs compared to advanced economies.

Meanwhile, the external sector remains favourable with gross exports projected to grow by 3.9 per cent across all sectors next year.

It said this was supported by improved performance in global trade as well as acceleration in demand for electrical and electronic (E&E) products, driven by the global technology upcycle .

For 2024, the report noted the external sector was at a steady recovery with total trade expected to grow by 9.4 per cent to RM2.88 trillion underpinned by a resurgence in the global technology cycle, resilient economic growth in major economies and steady commodity prices.

However, the MoF said this year’s gross imports growth is expected to outpace that of gross exports.

-- BERNAMA