How Global Economic Growth Will Evolve

Growth in the new economy is entering a new phase. The World Economic Forum’s latest report, Growth in the New Economy: Towards a Blueprint, brings together insights from over 11,000 business leaders and two years of global dialogue to examine how growth strategies are evolving. The conclusion is clear: growth is no longer defined by a single trajectory. It is being reshaped by a convergence of structural transformations. Artificial intelligence, geopolitical fragmentation, rising debt levels, demographic shifts, and the rebalancing of environmental and societal priorities are collectively redefining the contours of the global economy. At the same time, a sustained slowdown in growth and widening economic divides are putting existing growth models under pressure, across both advanced and emerging economies. Geopolitical tensions and supply chain disruptions are increasing uncertainty around long-term growth trajectories. Higher energy costs, policy instability, and skills shortages are emerging as critical barriers, while access to finance and infrastructure gaps continue to constrain lower-income economies. Yet within this complexity, clear patterns are emerging. Growth is shifting geographically. Middle-income economies are expected to account for approximately 65% of global GDP growth by 2030, with Asia contributing more than half of global expansion. Sectoral dynamics are also evolving. Information technology services, advanced manufacturing, and healthcare are expected to be key growth drivers, while traditionally strong sectors such as real estate and chemicals face slower momentum. The report frames the transition through a set of “no-regret” moves and strategic dilemmas that decision-makers must navigate across four key areas: -Strengthening productivity and human capital in an increasingly technology-driven economy. -Balancing global integration with domestic capacity and resilience. -Reinforcing economic fundamentals while redefining the role of government. -Aligning sustainability transitions with long-term economic prosperity. For business leaders and policymakers, the message is not about choosing a single path. It is about managing trade-offs. The organisations and economies that will lead in the new environment are those able to balance competing priorities, innovation and inclusion, resilience and efficiency, short-term pressures and long-term strategy. Growth in the new economy will not be linear. It will be shaped by those who can navigate complexity with agility, while staying anchored in fundamentals. #economy #transformation #organisations

This chart from The Economist, based on IMF data, captures one of the most important long-term macro shifts of the 21st century — the BRICS economies (Brazil, Russia, India, China, South Africa) surpassing the G7 in their share of global GDP measured in purchasing-power parity (PPP) terms. In 1992, the G7 nations accounted for roughly 45% of global output, while the BRICS combined represented less than 20%. Three decades later, that balance has reversed. By 2024, the BRICS bloc had reached just over 31% of world GDP (PPP), while the G7 fell below 30% — and the IMF projects this divergence will widen further by 2028. The driving forces are structural rather than cyclical. China and India dominate the shift: together, they represent nearly two-thirds of BRICS output, powered by their vast populations and productivity gains. China’s share of global PPP GDP has climbed from 5% in 1990 to nearly 19%, while India’s has risen from 3% to over 8%. Meanwhile, G7 economies have seen stagnating productivity and demographic headwinds limiting growth potential. This transformation goes beyond symbolism — it reflects a fundamental realignment in economic gravity. As global trade, capital flows, and industrial policy increasingly orient toward the Global South, financial institutions and multinational strategies must adapt to a multipolar economic world. In short: the world’s productive core has shifted from the Atlantic to the Indo-Pacific. The G7 remains wealthier in nominal terms, but in real purchasing power, the BRICS era has begun — with profound implications for currencies, commodities, and geopolitical influence in the decade ahead. Source: The Economist

"Most of the developing world is turning into a development-free zone" is the rather grim title of a blog by our The World Bank World Bank Development Economics Chief Economist Indermit Gill and Deputy Chief Economist M. Ayhan Kose. Building on the June 2025 Global Economic Prospects report they highlight some bad news: 📉 International trade discord has disrupted long-standing policies that once supported poverty reduction and prosperity. 📊 Global GDP growth is forecast to drop to 2.3% this year—its weakest in 17 years outside of recessions. 📆 By 2027, global GDP growth is expected to average just 2.5% for the 2020s—the slowest pace since the 1960s. 🌍 The poorest countries will be hit hardest, with many developing economies becoming “development-free zones.” 💸 By 2027, per capita GDP in developing economies (excluding China) will be 6% below pre-pandemic expectations. 📉 Growth in developing economies has declined for three straight decades—from 5.9% in the 2000s to 3.7% in the 2020s. 📦 Global trade growth has also slowed—from 5.1% in the 2000s to 2.6% in the 2020s. 🏗️ Investment is weakening while debt levels are rising. 🔄 Many of the forces that once drove global development have reversed. 🕰️ Opportunities for easy policy fixes—like those enabled by low interest rates—have passed. 🧍 Policymakers have largely remained passive, hoping for spontaneous improvement. What could be way forward? Priorities include: 🔁 Rebuild trade relations by reducing tariffs, deepening trade agreements, and restoring a rules-based global trade system to boost growth. 💰 Restore fiscal order through better revenue collection, smarter subsidies, and stronger debt management. 👷 Accelerate job creation to meet the demands of booming working-age populations, especially in Sub-Saharan Africa, South Asia, and MENA. 📒 Blog: https://lnkd.in/gwiuka7x 📕 June 2025 GEP: https://lnkd.in/guMk4HGy

As we usher in a new year, I'm pleased to share UN DESA's flagship report, the World Economic Situation and Prospects 2026. The global economy has shown remarkable resilience despite the sharp tariff spikes that unsettled trade last year. We project economic growth to stabilize at 2.7 per cent in 2026, compared to 2.8 per cent in 2025, before picking up to 2.9 per cent in 2027. Inflation across the world is easing. While broadly stable, these figures remain below the pre-pandemic average of 3.2 per cent. Moreover, beneath this resilience lie persistent risks and deep imbalances that threaten our progress towards the Sustainable Development Goals. High debt burdens and shrinking fiscal space are constraining investment. Wages are lagging, and persistent cost-of-living pressures are squeezing household budgets, particularly for low-income families. Trade growth is expected to slow to just 2.2 per cent in 2026 due to protectionist measures and geopolitical tensions. Climate shocks add another layer of complexity, while artificial intelligence holds much promise but risks deepening inequalities without inclusive policies. Our report advocates a balanced and forward-looking approach, with countries adopting a smarter policy mix. This includes central banks managing inflation while maintaining flexibility in response to shocks, well-designed government spending with targeted support for vulnerable populations, and strategic investments in renewable energy, climate-resilient agriculture and low-carbon technologies. Yet, national efforts alone are insufficient. We must capitalize on momentum from 2025: the Sevilla Commitment, the Doha Political Declaration, COP30's Belém Package, and efforts to revitalize the World Trade Organization and advance UN-led AI governance. The blueprints for sustainable development are in place. What is needed now is continued, coordinated action towards implementation. I encourage you to explore the #WorldEconomyReport for insights on ensuring sustainable, resilient, and inclusive growth in the years ahead: https://lnkd.in/eG4Q_-9t  

The Trade and Development Report 2025, published by UN Trade and Development (UNCTAD) and ominously titled “On the brink: Trade, finance and the reshaping of the global economy”, underscores how the tightening interdependence of #trade and #finance is reshaping #global economic trajectories amid persistent uncertainty. Global economic growth is projected to decelerate to approximately 2.6 per cent in 2025, down from 2.9 per cent in 2024, reflecting softening demand, investment hesitation, and structural vulnerabilities in both advanced and developing economies. Early-year trade growth benefited from tariff front-loading and strong demand linked to artificial intelligence–driven investments; however, these temporary boosts are expected to fade as restrictive trade measures take effect and front-loading dissipates. A central theme of the report is the financialization of global trade: more than 90 per cent of world trade now depends directly on financial instruments such as credit, letters of credit, and specialized trade finance facilities. This deep linkage increases systemic exposure to financial volatility, particularly for developing economies that face higher borrowing costs, limited access to trade finance, and heightened exchange-rate sensitivity. The report warns that geopolitical fragmentation, climate-related shocks, and #policy uncertainty continue to suppress investment appetite and destabilize predictable trading conditions. UNCTAD emphasizes that these compounded pressures disproportionately affect developing countries, where constrained fiscal space and limited financial buffers amplify vulnerability. To enhance resilience and support inclusive growth, the report calls for reforms to the global financial architecture, alignment of trade and finance with #sustainable development objectives, and coordinated policy measures to mitigate systemic risks while strengthening long-term economic stability. Given these findings, in my opinion, deep tech #diplomacy becomes essential to navigate accelerating technological disruption, manage systemic #risks, and ensure equitable participation in emerging digital and quantum economies. Nations and multilateral institutions must collaborate on standards, governance models, and #quantum-resilient infrastructures to safeguard financial systems, supply chains, and digital identities. Quantum-proofing the #economy is no longer optional; it is foundational to preserving stability, competitiveness, and #sovereignty in an era defined by rapid technological convergence. #strategy #ecosystem #society #economy #trade #digital #future

🌍 Global Debt Just Hit $338 Trillion That’s a 235% debt-to-GDP ratio — with private debt falling (lowest in 10 years) and public debt surging. • US: ~125% debt-to-GDP • China: ~89% • Japan: 255%+ So what does this mean for leaders, investors, and innovators? 🔑 1. The Risk Has Shifted Private debt is down, public debt is up. Governments — not companies or households — are carrying more of the burden. Risk is now in Washington, Beijing, and beyond. 🛡️ 2. The Safety Net Is Thinner In past downturns, governments cushioned economies with stimulus. Today, heavy debt limits those options. Future crises may force hard choices: inflation, higher taxes, or austerity. 📉 3. Growth Faces Pressure Households and businesses are deleveraging. That keeps balance sheets healthier but slows expansion. Without innovation and productivity gains, economies risk stagnation. 💸 4. Investors: Watch Yields Governments will issue more bonds to finance debt. That competes with private capital — keeping borrowing costs high and reshaping investment strategies. ⚠️ 5. Fragility Is Rising On the surface, growth continues. But with leverage this high, any shock — rates, conflicts, or slowdowns — could trigger outsized ripple effects. 👉 Bottom line: The global economy is shifting from a private-debt problem to a public-debt problem. Leaders who see that shift early will be better prepared for the policy, market, and innovation cycles ahead.

The global economy is no longer moving in one direction. It is being shaped by two powerful forces that are not aligned. In this latest Chief Economist Dispatch, I argue that what began as a geopolitical energy shock has evolved into something more complex. This is no longer just about oil prices. It is about the reliability of energy flows, the resilience of supply chains, and the growing role of logistics and infrastructure in shaping outcomes. Even with a ceasefire in place, markets are not pricing resolution. They are pricing fragility. At the same time, the AI investment cycle continues to support growth, particularly in the United States, through capital spending, productivity expectations, and strong performance in a narrow set of sectors. But this same cycle is energy-intensive. It raises demand for power, infrastructure, and capital, reinforcing the very constraints created by the energy shock. The result is a global economy defined by divergence. Across countries, outcomes are increasingly shaped by energy exposure, policy space, and external balances. Across markets, capital is becoming more selective, with recent outflows concentrated in the most energy-exposed regions. Across policies, governments face tighter trade-offs, as higher real interest rates and rising fiscal pressures limit room to respond. This is not a typical cycle. Growth is still there, but it is narrow. Risks are elevated, but uneven. Inflation is harder to interpret, shaped by both supply constraints and shifting demand. And the interaction between energy and technology is beginning to redefine how markets price risk. The key question now operates on two levels. In the near term, it is how long the energy shock lasts and how policy absorbs it. Over the longer term, it is whether we are moving into a more persistent regime where energy constraints and capital-intensive technological investment reinforce each other. This is the tone-setting backdrop for our work going forward. Read the full Dispatch here: https://lnkd.in/eNd5fv8a — and, after that, explore more of our research at the IIF.

The Global Economic Shockwave of AI — and Why It’s Only Beginning Artificial Intelligence isn’t just another technology wave. It’s a macroeconomic transformation engine — redefining productivity, labor, and value creation at a scale last seen during the Industrial Revolution. The New Growth Multiplier Analysts estimate AI could inject $15–20 trillion into global GDP by 2030 — roughly the size of the U.S. economy today. Unlike the internet or cloud revolutions, AI doesn’t just digitize work — it performs it. This shifts the productivity curve from “tools that help humans” to “systems that think, act, and learn.” The Productivity Paradox For decades, global productivity has stagnated. AI is reversing that trend. • Agentic automation is delivering 30–50% efficiency gains in finance, logistics, healthcare, and education. • Generative AI is redefining cognitive and creative output. • Decision intelligence systems are compressing time-to-insight from weeks to seconds. Each layer of automation compounds upon itself — creating a self-learning economy that gets smarter every cycle. The Labor Shift AI won’t just replace jobs — it will redefine them. By 2030, over 40% of work hours will involve AI augmentation. The nations that lead will: ✅ Reskill their workforce faster than automation scales. ✅ Embed AI fluency and ethical reasoning into education. ✅ Build governance frameworks that promote inclusion and trust. The Capital Reallocation We’re entering an era of AI-weighted capital markets — where investment flows toward algorithmic value creation. Competitive advantage is no longer about size or spend; it’s about speed of learning, data leverage, and AI governance maturity. The Leadership Imperative The economic impact of AI will be determined not by the models we build — but by the governance we design. Boards and CEOs must ensure AI is deployed not just to cut costs, but to create new markets, new jobs, and new forms of intelligence. ⸻ AI isn’t transforming the economy. It is becoming the economy. The next decade will reward leaders who move from adoption ➜ autonomy — building organizations that learn, decide, and act with intelligent scale. #AI #AgenticAI #ArtificialIntelligence #Economy #Transformation #Leadership #DigitalStrategy #BoardroomAI #AIEthics #VeejayJadhaw

We have revised our outlook for global growth downwards as trade policy uncertainty weakens growth. Today, Chief Economist Álvaro Santos Pereira and I launched the OECD #EconomicOutlook. Global GDP growth is projected to slow from 3.3% in 2024 to 2.9% in 2025 and 2.9% in 2026. The slowdown is pervasive to most countries, especially those more affected by rising trade barriers. Countries should engage with each other to find a way to ease trade tensions and improve policy certainty. Governments should also focus on reforms to revive business investment, innovation and labour productivity, particularly ones that have a limited near-term fiscal cost. 🔗 https://oe.cd/64a

Between January and today, our global economic outlook has completely shifted. At the beginning of the year, our headline read: "Global economy stabilizes, but developing economies face tougher slog." Today, it is: "Global economy set for weakest run since 2008 outside of recessions." That says it all. The June edition of our Global Economic Outlook #GEP2025 shows that growth forecasts have been downgraded in 70% of countries around the world. Trade tensions and policy uncertainty have cost the world almost half a percentage point of GDP growth. For 60% of developing economies, slower growth means stalled progress on poverty reduction, less jobs, and fewer chances to narrow the gap with advanced economies. To turn this around, three things need to happen over the coming months: - Trade relations will need to be rebuilt or diversified,   - Fiscal deficits will need to be addressed, including through domestic revenue mobilization, - Many more jobs will need to be created, including through pro-private sector reforms. For developing countries, this means transforming uncertainty into possibility.   https://lnkd.in/ehtUDQ3B