Economic growth in East and South Asia is strong, driven by private consumption and exports, despite risks from geopolitical tensions and other challenges, according to the UN World Economic Situation and Prospects (WESP) 2025 report.
The report, released over the weekend, forecasts global growth at 2.8 per cent for this year, unchanged from 2024. Although the world economy shows resilience, growth is below the pre-pandemic average of 3.2 per cent hindered by weak investment, low productivity, and high debt levels.
It indicates that lower inflation and monetary easing may modestly boost global economic activity in 2025. However, uncertainties persist due to geopolitical conflicts, rising trade tensions, and increased borrowing costs.
These challenges are particularly severe for low-income countries, where fragile growth could threaten progress toward the Sustainable Development Goals (SDGs). António Guterres, UN Secretary-General, emphasized that all countries must address these risks collectively to ensure a prosperous future.
Economic prospects in East Asia are stable, with average growth projected at 4.7% in 2025 and 4.5 percent in 2026, slightly down from 4.8 per cent in 2024, according to the report.
Despite a moderate slowdown, this region remains a significant contributor to global economic growth. Private consumption is supported by low inflation and strong wage growth, alongside substantial contributions from merchandise trade. Inflation is expected to remain low at 1.4 per cent in 2025.
China’s economic growth is projected at 4.8 per cent this year, down from an estimated 4.9 per cent in 2024. The government is implementing proactive measures such as monetary easing and fiscal support to strengthen the property market and boost manufacturing and infrastructure investments.
In South Asia, GDP growth is anticipated at 5.7 per cent in 2025 compared to 5.9 per cent in 2024, driven by strong performance in India and recovery in Bhutan, Nepal, Pakistan, and Sri Lanka. However, risks to this outlook include declining external demand, ongoing debt issues, and social unrest.
Both regions face increasing risks that could dampen their economic prospects. Key challenges include escalating geopolitical tensions, trade disputes, and climate change impacts that may reignite inflationary pressures and threaten food security, according to the report.
