World Economic Situation

and Prospects
Executive Summary
2025
Executive Summary

Subdued global outlook Despite continued expansion, the global economy

is projected to grow at a slower pace than the
amid persistent uncertainties 2010–2019 (pre-pandemic) average of 3.2 per
The world economy has remained resilient through cent. This subdued performance reflects ongoing
2024, avoiding a broad-based economic contraction structural challenges such as weak investment,
despite years of multiple, mutually reinforcing slow productivity growth, high debt levels,
shocks and the most sustained inflation-driven and demographic pressures. Many developing
episode of monetary tightening in recent history. In countries are still grappling with the prolonged
the near term, global economic growth is expected scarring effects of the pandemic and other
to remain stable but subdued. While continued recent shocks. While the green transition and
disinflation and monetary easing in a large number technological advancements hold the potential
of countries are expected to boost aggregate to boost growth, any benefits that accrue may be
demand, ongoing conflicts and rising geopolitical disproportionately concentrated in developed
tensions could exacerbate challenges on the supply economies. Meanwhile, many developing nations
side. In addition, persistently tight fiscal space face significant hurdles in mobilizing financing to
and lingering debt challenges in many developing invest in critical infrastructure, technology, and
countries will continue to constrain their ability human capital and in moving up manufacturing
to invest in productive capacities and stimulate and services value chains.
economic growth.
Risks to the near-term outlook are still largely
Global economic growth is forecast at 2.8 skewed to the downside albeit less pronounced
per cent for 2025 and 2.9 per cent for 2026, than in 2023 owing to positive developments
largely unchanged from the rate of 2.8 per in certain key areas in 2024. Favourable trends
cent recorded in 2023 and estimated for 2024. include continuing disinflation across the
Positive but somewhat slower growth forecasts majority of countries and the ongoing monetary
for China and the United States of America will easing by major developed country central banks
be complemented by modest recoveries in the (a long-awaited move that has contributed to
European Union, Japan, and the United Kingdom improving the global financial environment). At
of Great Britain and Northern Ireland and robust the same time, various uncertainties continue to
performance in some large developing economies, cloud the near-term economic outlook; measures
notably India and Indonesia. The short-term such as the Global Economic Policy Uncertainty
outlook for many low-income and vulnerable Index and the geopolitical risk index remain
countries remains less favourable. Growth in the above historic averages. While global inflation
least developed countries (LDCs) is projected to has eased, the pace of disinflation has slowed,
improve slightly in 2025, but the forecast has been driven by sticky prices in housing and other
revised downward from mid-2024 projections. services sectors in developed economies. Should

II WORLD ECONOMIC SITUATION AND PROSPECTS 2025

inflationary pressures re-emerge, central banks, to 1.3 per cent in 2025 and 1.5 per cent in 2026.
especially in large, developed economies, would Lower inflation, easing financing conditions, and
likely slow the pace of rate cuts, suggesting resilient labour markets are expected to support
that policy rates could converge to levels higher private consumption and investment. However,
than before the pandemic. High borrowing costs likely fiscal consolidation, ongoing geopolitical
and debt sustainability challenges are likely to uncertainties, and long-standing structural
persist, increasing the vulnerability of developing challenges such as population ageing and weak
economies that are already in or at high risk of productivity growth will constrain the pace
debt distress. of expansion.

Progress towards achieving the Sustainable Japan is poised for continued economic recovery.
Development Goals (SDGs) remains insufficient, Growth is forecast to pick up from an estimated
though some indicators are turning around from -0.2 per cent in 2024 to 1.0 per cent in 2025 and 1.2
pandemic-induced reversals at the aggregate per cent in 2026. Private consumption growth—
level. Notably, global extreme poverty has having stalled since mid-2023 due to weak wage
returned to pre-pandemic levels in 2024. The growth—is projected to recover gradually while
world’s prevalence of moderate or severe food investments remain resilient. The Bank of Japan
insecurity in the total population edged down faces a policy dilemma, as excessive monetary
marginally from 29.1 per cent in 2021 to 28.9 per tightening could push the economy back into
cent in 2023, remaining higher than the 25 per deflation by slowing wage growth, which has only
cent registered in 2019. However, challenges recently begun to accelerate.
continue to impede progress in vulnerable
In the Commonwealth of Independent States
countries and are likely to be exacerbated by
(CIS) and Georgia, growth is projected to
the increasing intensity and adverse impacts of
moderate to 2.5 per cent in 2025 from 4.2 per
climate change across the world.
cent in 2024, primarily reflecting an anticipated
slowdown in the Russian Federation. Labour

Increasing economic shortages and a significant and persistent

tightening of monetary policy is likely to bring
divergence across countries the economy of the Russian Federation back to
With estimated growth of 2.8 per cent in gross a lower but more sustainable growth trajectory
domestic product (GDP), the United States in 2025 despite continuing fiscal expansion,
economy outperformed expectations again especially in military spending. Regional
in 2024 thanks to strong consumer spending, prospects are clouded by numerous risks and
public sector spending, and non-residential uncertainties because of the ongoing war in
investments. However, growth is expected to Ukraine and broader geopolitical tensions.
moderate to 1.9 per cent in 2025 and recover
slightly to 2.1 per cent in 2026 amid weaker labour
Growth moderation in
market performance, modest income growth, and
looming cuts in public spending. While further China and modest recovery
interest rate cuts will provide a tailwind for the in many developing countries
economy, stubborn core inflation will likely keep
China is facing the prospect of gradual
the Federal Reserve cautious and discourage rapid
economic moderation, with growth estimated
monetary easing.
at 4.9 per cent for 2024 and projected at 4.8 per
In contrast, economic growth in Europe is cent for 2025. Public sector investments and
projected to gradually pick up in 2025 and 2026 strong export performance are partly offset by
after weaker-than-expected performance in 2024. subdued consumption growth and lingering
In the European Union, GDP growth is forecast to weakness in the property sector. The Chinese
strengthen from an estimated 0.9 per cent in 2024 authorities have stepped up policy support to

Executive summary III

lift property markets, address local government demand, persistent debt challenges, and social
debt challenges, and boost domestic demand. unrest and political turmoil in some economies
The shrinking population and rising trade and may undermine the outlook for the region.
technology tensions, if unaddressed, could
Growth in Western Asia is set to strengthen
undermine medium-term growth prospects.
to 3.5 per cent in 2025 from an estimated 2.0
Economic growth in Africa is projected to per cent in 2024, driven by improved prospects
strengthen from an estimated 3.4 per cent in in Saudi Arabia and Türkiye, the region’s two
2024 to 3.7 per cent in 2025 and 4.0 per cent in largest economies. Economic performance in
2026, driven by recovery in the region’s largest the region’s major oil-exporting countries is
economies—Egypt, Nigeria, and South Africa. forecast to improve in 2025 thanks to the easing
While East Africa maintains robust growth, of oil production cuts by OPEC Plus.1 The six
Central Africa lags behind due to stagnating country members of the Cooperation Council for
oil production and political instability. Despite the Arab States of the Gulf will enjoy relatively
a somewhat positive outlook, significant low inflation, supported by energy and food
challenges persist, including lingering debt subsidies. In contrast, conflicts, persistent
burdens, high unemployment (especially high inflation, and tight fiscal space will weigh
among youth), and climate disasters. Inflation negatively on the outlook for oil-importing
remains above 10 per cent in several countries. countries in the region.
Trade performance has been modest despite
advancements in regional integration through The economic outlook for Latin America and
the African Continental Free Trade Area the Caribbean is moderately positive, with
(AfCFTA) mechanism. Extreme poverty has been growth projected to rise from an estimated 1.9
rising in the region amid slow income growth. per cent in 2024 to 2.5 per cent in 2025, supported
by improvements in private consumption, easing
In East Asia, economic growth is expected monetary policies, and stronger export growth.
to moderate from an estimated 4.8 per cent Inflation is gradually declining in the region but
in 2024 to 4.7 per cent in 2025 and 4.5 per cent remains high in a few economies. Stagnant per
in 2026. Private consumption has remained capita GDP growth during the past decade has
the major driver of growth, supported by stalled progress in reducing extreme poverty
resilient labour markets and mild inflation in and inequality.
most economies. Increased global demand for
artificial-intelligence-related electronic products Economic growth in the least developed
has buoyed export growth. However, significant countries (LDCs) is projected to rise to 4.6 per
downside risks persist amid compounding cent in 2025—up from the 4.1 per cent growth
geopolitical risks, escalating trade tensions, estimated for 2024 but still well below the 7.0
and possible worse-than-expected performance per cent SDG target. While international tourism
among major trading partners. recovery lends some support to LDC growth,
conflicts and geopolitical tensions, particularly
The near-term outlook for South Asia is in Africa, deter the investment needed for
expected to remain robust, with growth stronger economic expansion. Additionally,
projected at 5.7 per cent in 2025 and 6.0 per cent rising external public debt leaves many LDCs at
in 2026, driven by strong performance in India significant risk of debt distress.
as well as economic recovery in a few other
economies. The Indian economy is forecast The economies of the small island developing
to expand by 6.6 per cent in 2025, primarily States (SIDS) are projected to grow by an
supported by solid private consumption and average of 3.4 per cent in 2025, down from 3.8
investment growth. However, weaker external per cent in 2024, as the initial boost from the

1 OPEC Plus comprises the twelve members of the Organization of the Petroleum Exporting Countries as well as ten non-OPEC oil producers.

IV WORLD ECONOMIC SITUATION AND PROSPECTS 2025

recovery of international tourism continues to and pushing up food prices. La Niña effects
recede. Extreme weather events remain a key are expected to persist through early 2025,
driver of uncertainty. Economic growth in the potentially impacting crop yields through
landlocked developing countries (LLDCs) extreme weather events.
is projected to accelerate moderately from an
estimated 4.7 per cent in 2024 to 4.9 per cent
in 2025 as stabilizing oil prices limit the rise in Strong labour market
transportation costs. Nevertheless, many LLDCs conditions begin to moderate
continue to face significant uncertainties related
in developed economies
to conflict and political instability, rising trade
tensions, and climate change. Labour market conditions in developed
countries have remained favourable in 2024,
with total employment for country members
Developing countries continue of the Organisation for Economic Co-operation
to experience elevated inflation and Development (OECD) exceeding the
pre-pandemic level by almost 4 per cent.
Global inflation has continued its downward
Female economic activity has continued to
trend, with headline inflation decreasing from
rise, reducing gender gaps in employment.
5.6 per cent in 2023 to an estimated 4.0 per cent
Tight labour markets have contributed to
in 2024, and a further decline to 3.4 per cent is
nominal wage growth, and slowing inflation
projected for 2025. This decline is attributed to
has led to higher real wages in most developed
easing labour market pressures in developed
economies—though in some, real wages have
economies and moderating international food
remained below 2019 levels. Moderating
and energy commodity prices. Disinflation is
employment gains in recent months suggest a
occurring at different rates in developed and
possible peak, with unemployment potentially
developing economies. While the inflation rate
increasing in 2025.
for developed economies is expected to decline
from 4.8 per cent in 2023 to 2.6 per cent in 2024
and 2.2 per cent in 2025, the rate for developing
Developing countries continue
economies is projected to decrease more
gradually from 7.0 per cent in 2023 to 6.0 per cent to grapple with high youth
in 2024 and 5.1 per cent in 2025. The double-digit unemployment
inflation rates recorded for several developing
The labour market situation in developing
countries in 2024 are likely to extend into 2025.
countries remains challenging, with significant
Despite the overall improvement, upward
variations in the outlook driven by differing
inflationary risks persist. These include potential
economic conditions and policy responses. Some
supply shocks in global commodity markets due
economies have exhibited resilience; in Brazil, for
to ongoing conflicts that could drive up energy
example, unemployment is at a decade low, and
and food prices, export restrictions imposed by
employment indicators in India have remained
major producers, and climate-related shocks
robust. In many developing nations, however,
affecting crop yields.
serious employment challenges continue. In Latin
Food inflation remains particularly persistent in America and the Caribbean, weak employment
developing economies, with about half of them growth has been largely confined to the informal
experiencing rates above 5 per cent in 2024—an sector. African labour markets have struggled to
indicator of continuing difficulties for those absorb a rapidly increasing population into the
living in poverty. Adverse weather conditions, workforce and provide meaningful employment.
particularly in parts of Africa and South and East Youth unemployment rates remain persistently
Asia, have continued to impact many countries high in Latin America, North Africa, South Asia,
in 2024, inflicting damage to infrastructure and Western Asia.

Executive summary V
Global investment sees modest Cross-border financing
improvement, yet challenges flows rise
remain Cross-border financing activities, stagnant since
After a two-year slump, investment 2022, have grown in 2024. United States dollar
has grown by an estimated 3.4 per cent credit to non-bank borrowers outside the United
globally in 2024, though with significant States reached $13.1 trillion in the second quarter
regional variations. Among developed of 2024, rising from $12.7 trillion in late 2023 and
approaching the recent peak of $13.4 trillion
economies, investment activity (in particular
in 2021. Euro credit to non-bank non-resident
residential investment) weakened in Europe
borrowers grew modestly to €4.2 trillion in the
and Japan during the first half of 2024,
same period. Combined dollar and euro credit
while the United States maintained strong
to non-bank borrowers outside their respective
investment growth in all sectors, including
currency areas reached $17.7 trillion in the second
residential and non-residential structures,
quarter of 2024, matching the 2021 peak. Market
equipment, and intellectual property.
conditions for international borrowers improved
Several developing economies, including China,
in early 2024 with anticipated policy rate cuts
India, and Mexico, have maintained robust
by major central banks, enabling some African
investment growth, while African nations
sovereign borrowers to return to the Eurobond
have faced limited public investment due to
market. A significant number of LDCs continue
high debt servicing burdens, and Western Asia
to face challenges, however, with many at risk of
has experienced low investment growth amid
or already in debt distress. Official development
subdued oil revenues.
assistance (ODA) flows to Africa and the LDCs
grew moderately in 2023, but such flows face
substantial downside risks and limited growth
International trade rebounds potential through the 2024–2025 period.
after a slump in 2023
Growth in the volume of global trade has Most central banks have
rebounded, increasing from 0.9 per cent
in 2023 to an estimated 3.4 per cent in 2024,
shifted to monetary easing
driven by the recovery of merchandise trade. In 2024, most central banks have shifted to
China, the United States, and East Asian monetary easing driven primarily by disinflation,
economies have demonstrated strong export supported by concerns about the impact of
performance in machinery and electronics, high financing costs on economic growth. The
while Europe has experienced broad declines. European Central Bank initiated this shift in June
Amid weakening commodity prices, exports 2024 and was followed by the Bank of England in
from Africa and Latin America have decreased July and the Federal Reserve in September, while
in value terms. Meanwhile, services trade has the Bank of Japan moved in the opposite direction
grown by an estimated 6.4 per cent in 2024 and and began tightening in March. By November
now represents almost 25 per cent of world 2024, 67 out of 108 central banks were in the easing
trade. International tourist arrivals, a benchmark phase (up from 31 in December 2023), with 20
indicator of services trade, have reached more likely to begin easing soon. The transition
an estimated 1.4 billion in 2024, a virtually has been most evident in developed economies
complete recovery of the pre-pandemic level. and Asian economies, while African central banks
Global trade volume is projected to grow by have been slower to ease rates amid persistent
3.2 per cent in 2025, though this is subject to inflationary pressures. Significant uncertainties
growing uncertainties due to rising geopolitical remain regarding the duration and depth of the
tensions and emerging trade barriers. monetary easing cycle.

VI WORLD ECONOMIC SITUATION AND PROSPECTS 2025

Fiscal policy challenges development, and energy security. For
developing nations endowed with an abundance
persist in the aftermath of critical minerals, rising global demand for
of multiple shocks these minerals offers a unique opportunity to
stimulate economic growth, reduce poverty and
Developed and developing countries have faced
inequality, and foster sustainable development.
significant fiscal challenges in 2024, balancing
high public debt, elevated interest rates,
and mounting public spending demands. By
December 2024, global public debt stood at an Persistent supply-demand gaps
estimated 95.1 per cent of GDP—approximately for critical minerals
12 percentage points higher than in 2019
and 36 percentage points above the 2007 The rapid adoption of clean energy
level. Debt servicing costs have increased technologies—from wind turbines and
substantially, with Governments dedicating solar panels to electric vehicles and battery
an average of 8.5 per cent of fiscal revenues storage—is driving demand growth for many
to interest payments in 2024, up from 6 per critical minerals, including copper, cobalt,
cent in 2019. This burden disproportionately lithium, nickel, and rare earth elements. The
affects developing economies, with the median demand for critical minerals will likely increase
developing economy allocating 11.1 per cent of significantly as nations accelerate their energy
fiscal revenues to interest payments—a rate four transition strategies. However, the supply chains
times higher than that of developed countries. for critical minerals are highly concentrated,
Fiscal challenges are particularly acute in Africa, with reserves, processing, and downstream
production activities concentrated in a few
where interest payments have consumed 27 per
countries. This narrow supply base exposes
cent of government revenues in 2024, up from
the global market to potential disruptions
19 per cent in 2019. In several major African
from natural disasters, trade disputes, and
economies, interest payments have exceeded
regulatory changes. Unsurprisingly, the market
total expenditure on education and health.
for critical minerals is also marked by elevated
price volatility.

Harnessing the potential of Annual investments in critical minerals

critical minerals for sustainable production have increased in recent years;
lithium has seen the highest rate of growth,
development followed by cobalt, copper, and nickel. However,
Reducing reliance on fossil fuels and these investments fall short of what is needed
accelerating the adoption of renewable energy to meet global net-zero targets. Projections
technologies are essential for combating suggest that demand for critical minerals
climate change and ensuring a sustainable will rise sharply by 2030, with persistent
and liveable planet. However, this transition supply shortages expected thereafter unless
hinges on the large-scale utilization of critical considerable new investments are made to
minerals, deemed indispensable for clean energy expand the supply of these minerals.
technologies. The pursuit of net-zero emissions
by 2050 will require the widespread deployment
of these technologies alongside universal energy Investment in critical minerals
access but will also entail economic, social,
faces multiple constraints
and environmental challenges. Navigating the
complexities of critical mineral supply chains Despite growing demand, investment in
requires Governments to balance competing critical minerals remains constrained.
priorities in trade, climate action, sustainable Mining projects require substantial up-front

Executive summary VII

capital and need significant lead times to on mining and price volatility, can also limit
secure regulatory approvals, environmental diversification and long-term growth. Illicit
assessments, and construction permits. financial flows, corruption, and governance
Accessing sufficient capital is particularly deficits exacerbate these challenges, draining
challenging for firms in developing economies, resources that could otherwise support public
where political instability, weak legal investments in sustainable development. To
frameworks, and sudden policy changes maximize the benefits around critical minerals,
increase risks. Technological uncertainties, resource-rich nations must avoid the pitfalls
including advances in alternative battery of the “resource curse” and develop robust
technologies and substitutes for critical national policies, supported by a conducive
minerals, create the risk of stranded assets, international environment.
discouraging investment in costly exploration
and mining activities. The high price volatility
of critical minerals further exacerbates these Macroeconomic policies for
challenges, making it difficult for mining leveraging critical minerals
companies to secure investments and finance
long-term operations. Developing countries need an integrated
approach to manage their critical minerals
resources that combines fiscal and monetary
Leveraging the potential measures to ensure stability, manage volatility,
and ensure the equitable distribution of
of critical minerals to benefits. Robust tax systems can be put in
accelerate progress place to capture public revenues. Countries can
towards the Sustainable implement fiscal rules and establish stabilization
funds to manage and save excess revenues from
Development Goals critical minerals sectors during boom periods,
Countries with rich critical mineral reserves have fostering countercyclical policy measures and
immense potential to leverage these resources ensuring intergenerational equity. Monetary
to stimulate economic growth and promote policy can play an important role in helping
sustainable development. By attracting foreign countries avoid the resource curse. Central
and domestic investment, these countries can banks will need to balance objectives such as
boost fiscal revenues, create jobs, and expand controlling inflation, maintaining competitive
exports. Investing public revenues prudently can exchange rates, and fostering growth-friendly
help secure long-term benefits across societies monetary conditions. Effective macroeconomic
and economies; in particular, the joint expansion management in resource-rich economies
of critical minerals extraction and processing requires adequate coordination between fiscal
in resource-rich economies could accelerate and monetary policies.
progress towards the SDGs. As the development
experiences of resource-rich economies
demonstrate, however, such outcomes cannot Inclusive governance is a
be taken for granted. Environmental impacts must for harnessing the full
such as habitat destruction, water scarcity, and
potential of critical minerals
pollution threaten ecosystems and communities,
in particular Indigenous populations. Social Good governance is essential for transforming
risks, including increased inequalities, unsafe the development of critical mineral resources
labour practices, the use of child labour, and into progress on the SDGs. Resource-
exploitation (especially in artisanal mining), rich economies are increasingly adopting
highlight the need for better regulations and environmental, social, and governance (ESG)
protections. Economic risks, such as dependence standards and integrating due diligence

VIII WORLD ECONOMIC SITUATION AND PROSPECTS 2025

requirements into regulatory frameworks to and equipment acquisition, highlighting the
promote sustainable mining practices. Measures importance of developing and implementing
such as mandatory transparency in licensing, effective industrial policies.
contracts, and revenue reporting and the
establishment of anti-corruption agencies and
independent monitoring bodies are vital for Industrial policies needed
combating corruption in, and illicit financial to maximize benefits
flows from, the critical minerals sectors.
from critical minerals
Community engagement and social
Strategic industrial policies can be crucial for
responsibility are also key to ensuring that
enhancing access to, and the development
mining projects contribute to sustainable
of, relevant technologies that can help
development. Policies requiring free, prior
strengthen and expand the critical minerals
and informed consent can empower local
sector. Targeted policies can play a key role
and Indigenous communities by involving
in attracting foreign investment and securing
them in decision-making processes. Benefit-
financing for new projects, fostering technology
sharing arrangements can also enhance local
transfer and innovation, and building
development through infrastructure-building
technological capacities. Policymakers have
and job creation, strengthening trust between
access to a variety of policy tools, including tax
mining firms and communities. It is essential
incentives, subsidies, export restrictions, local
that Governments provide the necessary
content requirements, supplier development
protections for people and planet, enforcing
programmes, research and development
human rights and adequate labour standards
investment support, public-private partnerships,
while also implementing stringent policies to
and initiatives focused on the development
prevent the overexploitation of natural resources
of workforce skills. A key consideration for
and biodiversity loss.
countries is determining the most suitable
diversification strategy. Upstream diversification
opportunities may be found through backward
Technology access linkages in the mining equipment, technology,
remains a challenge for and services sectors. Midstream opportunities
developing countries exist in activities such as smelting, refining, and
producing intermediate products. Some nations
For developing economies, access to advanced may wish to pursue downstream diversification
mining technologies is crucial for improving by manufacturing components for renewable
extraction efficiency, minimizing environmental energy, electronics, high-tech industries, and
impacts, and increasing local value addition. At electric vehicles.
present, however, such access is constrained by
limited local capacity and reliance on foreign
expertise. To bridge the gap, countries must There is no
attract multinational firms that are required
one-size-fits-all approach
to facilitate the transfer of key technologies to
domestic firms, strengthen domestic innovation Successful industrial policy packages require
ecosystems to adapt these technologies to local political and macroeconomic stability, sustained
needs, and promote backward and forward political commitment, and sufficient long-term
linkages. Adopting the necessary technologies financing. Policy coherence is also essential, as
across all phases of mining—including the effectiveness of individual policy measures
exploration, extraction, refining and processing, often relies on their interaction with other
recycling, and disposal—demands significant policies. The use of targeted conditionalities,
investment in infrastructure, workforce training, whether applied as eligibility criteria or

Executive summary IX
performance standards, can further enhance are gradually gaining traction in sectors such as
their impact. Beyond these conditions, there battery manufacturing and renewable energy
are domestic and international factors that technologies. Blended finance, which combines
shape the diversification strategies available public and private funds, is also emerging as
to each country in their policy design. In terms a vehicle to reduce risks and mobilize private
of domestic considerations, the level of critical capital, though it must be managed carefully to
minerals reserves, technological capabilities, ensure debt sustainability and alignment with
and institutional capacities play a pivotal role long-term development goals.
in determining the feasibility and scope of
industrial policies. At the international level, the
green policies of major developed economies, Global cooperation
coupled with evolving trade, investment, and
is essential
cooperation agreements, create a dynamic policy
landscape that can be challenging to navigate. Global cooperation is essential for maximizing
the potential of critical minerals in driving the
There is no single approach to industrial policy.
energy transition and sustainable development.
Each country must tailor its policy package
At a more granular level, international
to its unique circumstances, institutional
collaboration is needed to increase supply,
capacities, and economic and geopolitical
stabilize supply chains, facilitate technology
priorities. Countries may be able to leverage
transfer, and boost investment. With the ongoing
their competitive position based on their
and substantial rise in unilateral policies,
reserves of critical minerals, geographic location,
trade restrictions, and protectionist measures,
and technological capabilities to strengthen
global markets for critical minerals are faced
their negotiating power and enhance the
with the increasing threat of fragmentation.
effectiveness of their industrial and innovation
Such measures can exacerbate asymmetries by
policies. Adequate institutional capacity is
depriving developing countries of opportunities
crucial for implementing local content policies,
to diversify their roles in critical minerals
which aim to promote downstream activities.
supply chains, raising costs for industries
Recent experiences show that local content
and consumers, and delaying the adoption
policies are most effective when complemented
of clean technologies. Fragmentation can
by measures that support the capabilities of also lead to significant global economic and
domestic suppliers. In certain cases, strong efficiency losses. To mitigate these risks, a
competitive leverage combined with effective balanced approach that integrates national
institutional capacity have enabled countries interests within collaborative frameworks and
to adopt ambitious policies aimed at fostering overarching objectives is essential. This requires
downstream activities, particularly in medium- establishing mechanisms for equitable access to
and high-technology industries. critical minerals, fostering technology-sharing,
and ensuring a fair distribution of benefits.

Financing instruments
to support investment New global cooperation
in critical minerals mechanisms are vital
Bridging investment gaps in the critical minerals New collaborative frameworks must ensure an
sector requires a multifaceted approach that equitable global supply of critical minerals.
combines government incentives, private The United Nations Secretary-General’s Panel
financing tools, and innovative strategies. on Critical Energy Transition Minerals has
Private financing tools such as venture capital developed a set of seven guiding principles
and sustainability-themed financial products and five actionable recommendations to

X WORLD ECONOMIC SITUATION AND PROSPECTS 2025

ensure that opportunities around the global However, the heterogeneity and complexity of
energy transition are pursued with equity, sustainability standards create major challenges,
justice, and sustainability as key objectives. particularly for small mining firms in developing
Strengthened multilateral trade cooperation countries, which often lack the resources and
under the World Trade Organization (WTO) and capacity to comply. This dynamic perpetuates
similar frameworks is also essential. Enhanced asymmetries, enabling larger corporations to
international cooperation is key to tackling dominate, while smaller players face exclusion
illicit financial flows as well as enhancing from international supply chains.
market transparency, stabilizing raw materials
Addressing these challenges requires
prices, fostering a more predictable investment
harmonizing and aligning sustainability
environment, and unlocking greater private
standards to streamline reporting and enhance
sector financing opportunities. Efforts to
comparability. New initiatives aim to create
establish price benchmarks and strategic market
more unified frameworks by involving diverse
interventions—including price floors, price
stakeholders in their development. However,
ceilings, and stockpiling—are being explored but
ensuring inclusivity and fairness necessitates
require careful calibration to avoid distorting
the establishment of practical support
market incentives.
mechanisms and adaptable frameworks to help
smaller mining operations meet requirements.

Supporting developing Partnerships between Governments, non-

governmental organizations, and the private
countries must be a priority sector can play a pivotal role in promoting
Supporting developing economies through socially and environmentally sustainable
international cooperation is essential, with practices, enabling equitable participation in
priority given to technology transfer, skills global critical minerals markets.
development, and institutional capacity-building.
Different groups of developing countries face
distinct challenges. Middle-income countries
International cooperation
need to focus on advancing technological is essential for accelerating
capabilities, fostering innovation ecosystems, growth and progress
and strengthening downstream activities. towards the Sustainable
Low-income countries need to address more
structural barriers, including weak governance
Development Goals
structures, limited infrastructure, and a lack of The global economy is at a critical juncture,
human capital. Bolstering institutional capacity grappling with interconnected challenges that
in these countries requires a focus on establishing include the scarring effects of the COVID-19
transparent governance frameworks and building pandemic, ongoing conflicts, high levels of
basic public sector capabilities. public debt, economic and social inequalities,
and the climate crisis. These challenges
underscore the need for robust multilateral
Enhancing the fairness cooperation to foster economic growth,
and effectiveness of accelerate the energy transition, and achieve
sustainability standards sustainable development. Concerted efforts to
address climate change must also be ramped
The mining industry is under increasing pressure up; the unfolding climate crisis has exposed
to adopt robust sustainability standards. A weaknesses in the international cooperation
proliferation of frameworks reflects growing framework, as climate events continue to
awareness of ESG responsibilities and heightened disproportionately impact the most vulnerable
demand for transparency from stakeholders. developing countries.

Executive summary XI
Amid these challenges, the United Nations and issues around equitable benefit distribution
General Assembly recently convened the and transparency in carbon credit accounting
2024 Summit of the Future, where the Pact for remain unresolved. Efforts to phase out fossil
the Future was adopted to promote a more fuels faced resistance, with no consensus
equitable and sustainable global framework. reached on a clear timeline for transitioning
This ambitious, cross-cutting, and far-reaching away from coal, oil, and gas. There were calls
commitment is intended to reinvigorate for more ambitious nationally determined
international cooperation and accelerate contributions by 2025, as current pledges remain
progress towards the SDGs. Among its key areas inadequate to limit global warming to 1.5°C,
of focus, the Pact calls for reforming the global underscoring the urgent need to align financial
financial system to better serve developing commitments, technological support, and
countries, including through measures to political action with climate goals.
address sovereign debt and mobilize resources
The Fourth International Conference on
for renewable energy and climate adaptation.
Financing for Development will present the
Efforts to address global cooperation challenges
opportunity to finalize a comprehensive
have also been emphasized in preparations
framework to align financial flows with the SDGs
for key international conferences in 2025,
and address global challenges. The proposed
including the Fourth International Conference
framework emphasizes domestic resource
on Financing for Development and the Second
mobilization through improved tax systems
World Summit for Social Development.
and international cooperation to combat illicit
The discussions and outcomes of the financial flows, alongside efforts to enhance
recently concluded twenty-ninth session of the role of the private sector in sustainable
the Conference of the Parties to the United development. It underscores the need for
Nations Convention on Climate Change stronger international development cooperation,
(COP 29) reflect both progress and persistent including meeting ODA targets, providing
challenges in accelerating the global energy climate financing, and supporting vulnerable
transition. The States Members of the United countries such as LDCs, LLDCs, and SIDS. It also
Nations committed to mobilizing $300 billion calls for reforms in global economic governance,
annually by 2035 to support renewable energy debt architecture, and trade systems as well as
infrastructure and technologies in developing the prioritization of technology, innovation,
countries as well as advancements in the and data to advance financial inclusion and
global carbon market framework to channel development objectives. Achieving these
resources into sustainable projects. However, ambitious goals will require coordinated efforts
the funding pledge falls short of the financing from Governments, international organizations,
needs identified by developing economies, the private sector, and civil society.

XII WORLD ECONOMIC SITUATION AND PROSPECTS 2025

For more information
www.un.org/en/desa