The global economy has admirably navigated through a series of shocks over the past few years. With inflation nearly back on track across many economies and central banks recalibrating policy, the Mastercard Economics Institute (MEI) believes it is time for the economy to shift gears once again. MEI expects the global economy in 2025 to be defined by shifts in monetary policy, fiscal policy and a move toward equilibrium rates for growth and inflation. Here are the key economic forecasts for 2025:
MEI forecasts 3.2% global GDP growth in 2025, following a 3.1% pace in 2024. Growth is expected to remain strong in the U.S., India, and the Gulf Cooperation Council (GCC), with modest expansion in Europe and much of Latin America and the Caribbean (LAC). In contrast, MEI expects a gradual stabilization in the Chinese Mainland on increased policy stimulus.
Inflation eased significantly across the major economies in 2024, driven by lower prices for durable goods and easing inflation for nondurable goods. While tariffs continue to pose upside risks to goods prices, moderating wage growth is expected to ease inflation in select services industries. MEI forecasts trimmed global inflation at 3.2% (removing the top and bottom 10% outliers) and average weighted inflation for G10 countries at 2.4%.
Consumers remain empowered as innovation and digitalization in the retail sector provide them with more choice and businesses with greater operational efficiency. MEI expects basket shifts; with lower prices and declining interest rates, spending on big-ticket items – electronics, furniture and appliances – will improve. While pent-up demand for experiences has diminished, MEI still observes a strong desire to prioritize spending on “big moments.”
Of course, the outlook is not without risks. The geopolitical backdrop remains a significant issue in Europe, Asia and the Middle East. Additionally, there is uncertainty surrounding the costs and gains of the incoming US administration’s economic agenda.
While there is a common narrative around the world, it is crucial to recognize the important nuances by region and country. Our regional sections highlight these differences.
We also explore a few key themes shaping the 2025 global economy, leveraging Mastercard’s aggregated and anonymized data to provide a unique perspective. This includes cyclical changes – such as shifts in consumption as central banks lower rates or how consumers respond to price level changes – and structural changes, like the impact of migration on capital flows or workplace flexibility driving greater female workforce engagement. Finally, MEI addresses how trade policy will influence relative prices worldwide.
Notes: estimates are % change of annual average, color indicates variance above (green) and below (orange) an estimate of long-run growth.
Source: Mastercard Economics Institute for economies in our research coverage and IMF for rest. Long-run estimates from IMF and Oxford.
Map Source: Natural earth and highcharts
The boundaries and names shown on this map do not imply official endorsement or acceptance by Mastercard Economics Institute.