Global economic growth is forecast to remain at 2.8% in 2025, unchanged from 2024, with the top two economies, the United States and China, holding back growth, according to a United Nations report released on Thursday. The World Economic Situation and Prospects report said that “positive but somewhat slower growth forecasts for China and the United States” would be complemented by a moderate recovery in the European Union, Japan and Britain and strong performance in some large developing economies, notably India and Indonesia.

“Despite the continued expansion, the global economy is projected to grow at a slower pace than the 2010–2019 (pre-pandemic) average of 3.2%,” according to the report by the United Nations Department of Economic and Social Affairs.

“This sluggish performance reflects ongoing structural challenges such as weak investment, sluggish productivity growth, high debt levels and demographic pressures,” it said.

The report said that US growth is expected to slow to 1.9% in 2025 from 2.8% last year due to a softening labour market and slowing consumer spending.

China’s growth is estimated at 4.9% in 2024 and is forecast to be 4.8% this year, partly offset by public sector investment and a strong export performance, slower consumption growth and prolonged weakness in the property sector.

Europe is expected to recover moderately, with growth accelerating from 0.9% in 2024 to 1.3% in 2025, “supported by easing inflation and resilient labour markets,” the report said.

South Asia is expected to remain the world’s fastest-growing region, with regional GDP forecast to grow by 5.7% in 2025 and 6% in 2026, the report said. This is supported by strong performance in India and economic recovery in Bhutan, Nepal, Pakistan and Sri Lanka.

India, the largest economy in South Asia, is forecast to grow by 6.6% in 2025 and 6.8% in 2026, driven by strong private consumption and investment.

The report said major central banks are likely to cut interest rates further in 2025 as inflationary pressures ease. Global inflation is forecast to decline from 4% in 2024 to 3.4% in 2025, providing some relief to households and businesses.

It calls for bold multilateral action to address interconnected crises, including debt, inequality and climate change.

“Monetary easing alone will not be enough to restore global growth or address widening inequalities,” the report added.