The global economy is poised for moderate acceleration in 2025, with real GDP growth forecasted to reach 3.2%, up slightly from 3.1% in 2024. The Mastercard Economics Institute’s (MEI) latest report, Economic Outlook 2025, highlights the drivers of this growth, including easing inflation, shifts in monetary and fiscal policies, and a return to equilibrium rates for growth and inflation.
Regional insights
Growth in the Gulf Cooperation Council (GCC) is expected to accelerate to 3.7% in 2025 from an estimated 1.8% in 2024, driven by robust non-oil activity and a partial recovery in oil production. Diversification initiatives and strong government balance sheets are set to sustain infrastructure investments, while lower interest rates are anticipated to spur private sector growth, employment, and domestic consumption. Population growth and rising female labour force participation will further support economic activity in the region.
Economic conditions in Turkey and Egypt remain constrained by fiscal and monetary adjustments. However, moderating inflation is expected to allow for monetary policy easing in 2025, paving the way for a gradual rebound in growth. Despite these improvements, geopolitical risks across the Middle East and Africa remain elevated, presenting challenges to sustained recovery.
South Africa’s economic outlook has brightened slightly following the formation of a national unity government, which has bolstered confidence. An improved electricity supply offers some encouragement, but meaningful recovery remains hindered by a lack of structural reforms and investment. Tourism, a key growth driver, remains below pre-pandemic levels but presents significant potential for expansion.
Tourism as a growth engine
Tourism continues to shine as a bright spot for the GCC, with the region becoming one of the fastest-growing global destinations. Strong government-led initiatives to expand the sector have driven significant gains, supported by USD-pegged currencies that enhance outbound travel affordability. Egypt and Turkey have maintained resilience in attracting tourists, while South Africa lags behind, presenting untapped growth opportunities.
Inflation and consumer spending
Global inflation eased significantly in 2024, driven by declining prices for durable goods and moderation in nondurable goods inflation. MEI projects trimmed global inflation at 3.2% in 2025, with G10 countries averaging 2.4%. While tariffs remain a risk for goods prices, slowing wage growth is expected to temper inflation in select services sectors. Lower prices and interest rates are forecast to boost consumer spending on big-ticket items like electronics, furniture, and appliances.
Consumer behaviour is also shifting. Innovations in retail and digitalization are providing consumers with greater choice and businesses with improved efficiency. While pent-up demand for experiences has softened, spending on significant events and milestones remains a priority.
The MEI report highlights several risks to the global economic outlook. Geopolitical tensions in Europe, Asia, and the Middle East remain significant, while uncertainty surrounds the impact of the incoming US administration’s economic policies. Trade policy changes and their effects on relative prices are also highlighted as key areas of concern.
According to the report, the impact of central banks lowering interest rates, structural changes such as migration’s influence on capital flows, and workplace flexibility driving greater female workforce engagement are some of the critical themes that will define the 2025 global economy.