GlobalData expects global economic growth to accelerate next year as inflationary pressures ease, but the London-based data analytics group lowered its forecast rate as a result of rising geopolitical tensions and disruptions to global supply chains.
Listed on the LSE’s Alternative Investment Market (AIM), GlobalData provides analysis to 70% of companies on the FTSE 100 index and 60% of Fortune 100 companies, including Schweppes, HSBC and EY-Parthenon.
The company maintained its 2024 GDP growth forecast at 2.52%, but lowered its 2025 projection to 2.54% from 2.6% to reflect the impact of rising geopolitical tension and potential supply disruptions carrying over into next year, according to GlobalData analyst Annapurna Pillutla.
“While the global economy is on the road to recovery, its growth depends on effective management of inflation, geopolitical risks and regional disparities,” said Pillutla.
The group’s analysis includes an index that estimates global supply chain pressure based on data from the Federal Reserve of New York. The index averaged -0.27 between October and the start of this year, up from -0.72 in the same period of last year.
The heightened pressure on global supply chains was primarily the result of disruptions to Red Sea trade routes caused by the conflict between Israel and Hamas. That led to higher shipping costs and a 66% drop in Suez Canal traffic in the 10 months to end-October.
The threat to global growth continues as geopolitical tension in the Middle East escalates. Most recently, Syrian President Bashar al-Assad’s dictatorship was toppled earlier this month after Syrian rebels seized control of the capital, Damascus.
This year’s global election cycle has also brought about power transitions in Africa. In Botswana, for example, an opposition coalition ended the ruling party’s almost six-decades rule.
In the US, the world’s largest economy, uncertainties about President-elect Donald Trump’s protectionist policies, including tariffs and local tax cuts, threaten to fuel inflation and worsen US debt, adding uncertainty to the Federal Reserve’s rate cutting decisions.
As a result, economic growth in the Americas is projected to slow from 2.28% this year to 1.83% in 2025. The region’s growth is also limited by Latin America’s political instability and structural challenges, such as low productivity and deteriorating infrastructure.
Still, economic growth is forecast in all other regions. Europe’s GDP is projected to expand 1.52% in 2025 from 1.4% this year, that of the Asia-Pacific region to 3.63% from 3.51%, and the Middle East & Africa by 3.74% from 2.31%.
The growth is seen as primarily driven by easing global inflation, which is expected to slow to 3.45% in 2025 from 5.8% this year, according to GlobalData. Lower inflation is forecast across all regions next year — most significantly in the Middle East & Africa region, where it is forecast to ease to 16.37% from 24.85%.
“By November 2024, 10 of 11 G10 [Group of 10] nations began rate cuts due to easing inflation,” said Pillutla. The central banks of Switzerland, Canada and Sweden, the European Central Bank, the US Fed and the Bank of England have all reduced interest rates.
“Broader geopolitical realignments, including US-China tensions, regional challenges in the Middle East & Africa and the potential resolution of the Ukraine conflict, are expected to reshape the global economic landscape in 2025,” said Pillutla.
“The outlook is cautiously optimistic, with growth hinging on central bank policies and geopolitical developments. The global economy remains fragile, with potential for either acceleration or slowdown in growth.”
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