Which economy did best in 2025?

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illuminem summarises for you the essential news of the day. Read the full piece on The Economist or enjoy below:

🗞️ Driving the news: Global GDP expanded by roughly 3% in 2025, defying early-year recession fears triggered by President Trump’s trade war and sustained geopolitical volatility
• Labour markets remained historically tight across most major economies, while equity markets delivered another year of solid gains
• Yet inflation continued to overshoot 2% targets across the OECD, underscoring persistent macro-imbalances despite headline resilience

🔭 The context: At the start of 2025, forecasters warned that new U.S. tariffs, weakened global demand, and tightening financial conditions could sink global growth
• Instead, energy prices stabilised, China delivered moderate stimulus to revive manufacturing, and Europe avoided an energy shock repeat
• Emerging markets, especially India, Indonesia, and Mexico, benefited from supply-chain diversification and strong domestic consumption, lifting global averages even as Germany and the U.K. flirted with stagnation.

🌍 Why it matters for the planet: Economic strength shapes global climate capacity: nations with healthier fiscal positions can fund decarbonisation, clean-tech incentives, and resilience investments
• But above-target inflation risks political pressures to delay climate policies seen as cost-raising, while trade wars complicate cross-border clean-tech supply chains
• Diverging growth trajectories also widen the gap between countries able to invest in the green transition and those vulnerable to climate-driven economic shocks

⏭️ What’s next: Central banks are expected to begin cautious rate cuts in mid-2026, contingent on sustained disinflation
• The U.S.–China tariff environment will determine whether global supply chains stabilise or fragment further
• The EU plans a new competitiveness agenda centred on green industry support, while emerging economies aim to sustain momentum through infrastructure and renewable-energy expansion

💬 One quote: “It could have been a lot worse,” The Economist writes, noting that 2025 surprised forecasters with its “remarkably durable” growth despite extraordinary policy shocks

📈 One stat: ~3% global GDP growth in 2025 — matching 2024 and outperforming most mid-year recession forecasts

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