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Global Economics, December 2025.

  • Writer: Shakeel Awan
    Shakeel Awan
  • Feb 25
  • 2 min read

GLOBAL GDP

The OECD forecast a more modest forecast for 2026, suggesting that growth will be expected to settle at 2.9%, following the period of 2025, where growth rates ranged from 2.8% to 3.2%


GLOBAL TRADE

The view of global trade from the end of 2025 witnessed retrospectively, record volumes but slowing growth.


  • South-South trade Surge; Trade between developing economies in East Asia and Africa expanded by about 8%.

  • AI in compliance; nearly 50% of the firms that had adopted AI for trade related activities have reported reduced costs.

  • Reduced trade deficit; the US trade deficit hit it's smallest level since mid 2020; a 25% drop over the year.


Whilst global trade in 2025 was expected to exceed $35 trillion; representing a 7% increase, growth slowed in the final quarter to a rate of around 0.5% for goods and 2% for services.


KEY RISKS AND CHALLENGES

Volatile interactions between nations and trading partners (generating retaliatory tariffs, sanctions, investment restrictions and protectionist policies).


GLOBAL INFLATION

In 2025, global inflation was reported to have averaged at 4.2% for the full year.


REGIONAL INFLATION

  • United States: 2.7%

  • Europe: 2.0%

  • United Kingdom: 3.4%

  • China: 0.8%

  • Emerging Markets: 5.3% (moderated).


Most economies have experienced declining headline inflation in 2025, compared to 2023-2024.


GLOBAL INTEREST RATES

  • US Federal Reserve: 3.5-3.75%

  • Bank of England: 3.75% (as inflation fell to 3.2%)

  • Bank of Japan: 0.75% (a 30 year high).

  • European Central Bank: Main deposit rate: 2.0%

  • Reserve Bank of India: 5.25%

  • Mexico: 7%

  • China: 1 and 5 year Loan Prime Rates: 3.0-3.5%


Interest rates as determined by major Central Banks.


GLOBAL EMPPLOYMENT

Global employment is current averaged at around 4.9%. The US and Europe face economic tightening, restricting growth of personnel capacity. Emerging markets however showed growth and stronger potential for hiring prospects. AI related roles continue to grow in demand. 2025 represented the weakest hiring activity since 2020.


GLOBAL MANUFACTURING

GLOBAL PRODUCTION AND ORDERS

The Global Manufacturing indicators; the Purchasing Manager's Index (PMI) hovered just above the 50-neutral mark; indicating a very modest rate of expansion in production.


REGIONAL PRODUCTION AND ORDERS

United States; a leader in manufacturing, new orders fell considerably, impacted by tariff related price rises.

China; Slight increase for December as their official PMI increased to 50.1

Eurozone: Renewed, deeper downturn in manufacturing as PMI dropped to 48.8, particularly in Germany.

Emerging Markets; Vietnam; PMI reached 53.0 and it's business confidence hit a 2 year high.


End of Report.


Curated by Xecology.



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