In 2024, the global economy is in a slow recovery process and growth momentum is still insufficient. Looking ahead to 2025, it is expected that the global economic growth rate will remain relatively stable, but the differentiation trend between different regions may further intensify. Meanwhile, global inflation rates are expected to continue to decline, and the job market is expected to remain relatively stable. In this context, global fiscal policy will return to a normalized track, while monetary policy may continue to maintain a loose tone. In addition, global trade is expected to show a recovery trend, but the accelerated restructuring of supply chains and industrial chains will have a profound impact on the trade pattern. Cross border investment is expected to gradually improve from the sluggish situation, but the investment flow may show a significant differentiation trend. However, there are still multiple uncertainties that pose a downward risk to the global economic growth outlook, including the possibility that the foreign policy of the new US administration may become the biggest variable affecting the global economic recovery process and pattern. Overall, although the global economy will continue to recover in 2025, the sustainability and balance of the recovery process will face many challenges. The economy is slowly recovering, and inflation continues to decline. In 2024, global economic growth tends to be stable but slow. After experiencing multiple shocks such as the pandemic, geopolitical conflicts, inflation, and monetary policy tightening, the global economy has shown unexpected resilience, but the growth rate has slowed down. The International Monetary Fund (IMF) predicts that the world economy will grow by 3.2% in 2024. This means that the period from 2020 to 2024 will be the slowest 5 years of global economic growth in over 30 years. Looking ahead to 2025, the global economy may move in a tortuous manner on a medium to low speed track. The pandemic has had a profound impact on the world economy, leaving behind various "scar effects" such as increasing income and wealth inequality, heavier government debt burdens, damaged human capital formation, and hindered globalization processes. Under the combined influence of these factors, the global economic growth momentum is insufficient, and the IMF predicts that the global economic growth rate will remain at 3.2% by 2025. However, the risk of a global economic downturn cannot be ignored. For example, if the United States abuses tariff measures and triggers countermeasures from other countries, it may lead to a global economic growth rate of less than 3%, especially for small economies that rely heavily on US trade and may suffer more severe impacts. In 2024, global inflationary pressures will continue to ease. With the easing of supply chain pressure and relatively low energy prices, global inflation continues to decline. The IMF predicts that the global Consumer Price Index (CPI) will increase by 5.8% year-on-year in 2024, a decrease of 0.9 percentage points from 2023. Looking ahead to 2025, it is expected that global inflation will further decline. From the demand side, as fiscal policies in various countries gradually return to normalcy and the effects of unconventional stimulus measures during the pandemic diminish, the growth rate of global aggregate demand slows down, which will drive inflation to continue to decline. From the supply side, geopolitical risks are erupting at multiple points, trade protectionism is on the rise, and global trade frictions are intensifying, which may push up trade prices and to some extent limit the downward space for inflation. Overall, the IMF expects the year-on-year increase in global CPI to drop to 4.3% in 2025, a decrease of 1.5 percentage points from 2024. The inflationary pressure in major economies is also showing a trend of easing, but it is not ruled out that some economies may experience a rebound in inflation. For example, if the new US government extensively and significantly increases tariffs on foreign countries, or if some countries implement stricter trade protectionism measures, these countries may face imported inflationary pressures, leading to structural inflation. Moderate growth in trade, low rebound in investment, and overall low rebound in global trade in 2024. Driven by factors such as reduced global inflation pressure, interest rate cuts by major central banks, and growth in Asian exports, the World Trade Organization (WTO) predicts that global trade in goods will grow by 2.7% in 2024, overcoming the dilemma of shrinking trade volume in 2023. Looking ahead to 2025, it is expected that global trade will continue to recover. With further global inflation levels falling and central banks continuing to implement loose monetary policies, global trade is expected to maintain a moderate recovery momentum. However, at the same time, the prospects for global trade growth still face many challenges. On the one hand, the increasing geopolitical instability and the rise of trade protectionism may lead to the emergence of new trade barriers, hindering the process of trade liberalization. On the other hand, the strategic competition between major powers is intensifying, and developed countries are increasing their efforts to attract key industries to return, especially in strategic industries such as semiconductors. The trend of diversification and regionalization of the global industrial chain is becoming more apparent. According to WTO predictions, the global trade growth rate is expected to reach 3.0% by 2025. But it should be noted that if the new US government restarts the trade war, it may seriously hinder the recovery process of global trade. From a regional and national perspective, trade growth will exhibit distinct differentiation characteristics. It is expected that Asia will lead global export growth, and trade growth in the Middle East and South America will also be relatively strong, but trade performance in Europe may be weaker. In 2024, the sluggish trend of global foreign direct investment (FDI) has improved. As the global economy gradually stabilizes and major central banks begin to cut interest rates, investment costs have decreased, leading to signs of improvement in global FDI after three consecutive years of decline. According to data from the United Nations Conference on Trade and Development, global FDI reached $809 billion in the first half of 2024, an increase of 25% compared to the first half of 2023. However, if FDI flows from tax havens such as Luxembourg and the Netherlands are excluded, the year-on-year growth rate of global FDI scale is only 1%. Looking ahead to 2025, it is expected that global FDI will achieve a slight increase. On the one hand, elections will be held in over 70 countries and regions in 2024. With the inauguration of the new government, the development strategies and industrial policies of various countries will become clearer, providing a relatively predictable policy environment for investors and helping to promote moderate growth of global FDI. On the other hand, the impact of geopolitical factors on global FDI is becoming increasingly significant, exhibiting three major characteristics: fragility, low growth, and being driven by transformation and restructuring. Fiscal policy returns to monetary easing in 2024, and global fiscal policy continues to normalize. Compared with the epidemic period, the fiscal deficits of various countries have converged, but overall they still maintain a relatively loose trend. According to the IMF report, from a country by country perspective, the broad government basic fiscal deficit to GDP ratio of developed economies in 2024 is 2.7%, and the fiscal stance is basically the same as the previous year; The ratio of the broad government basic fiscal deficit to GDP for emerging and middle-income economies is 3.5%, an increase of 0.2 percentage points from the previous year, reflecting a more relaxed overall fiscal stance in these countries. Looking ahead to 2025, it is expected that the fiscal policies of major economies will continue to normalize, while the impact of regime change after the "global super election year" of 2024 will gradually become apparent. In 2024, major economies such as the United States and Japan have completed their elections, and the policy proposals of the new government will have a significant impact on the trend of fiscal policies in various countries by 2025. At the same time, the fiscal deficits of major economies are expected to continue to converge, but the degree of convergence may vary. In 2024, major developed economies have started a cycle of interest rate cuts, with Japan and a few other economies being exceptions. In fact, Latin American economies such as Brazil, Chile, Argentina, and Peru have already chosen to cut interest rates in 2023. In the first half of 2024, European and American economies such as Switzerland, Sweden, Canada, and the eurozone began to cut interest rates, reflecting a shift in monetary policy in developed countries. In September 2024, the Federal Reserve significantly reduced interest rates by 50 basis points, marking a major shift in global central bank monetary policy. Looking ahead to 2025, it is expected that major central banks will continue to cut interest rates, but the pace of rate cuts is highly uncertain, and the differentiation of monetary policies among different economies will become more pronounced. Market expectations are that due to the possibility of tariffs imposed by the new US government and seasonal factors, inflation will rise, which may force the Federal Reserve to pause interest rate cuts in the second or third quarter of 2025, and may only cut rates twice a year. At the same time, if the economy remains sluggish and downward pressure on inflation continues, the European Central Bank is expected to continue cutting interest rates throughout the year. In addition, given rising inflation and moderate economic expansion, the market expects the Bank of Japan to continue to raise interest rates slightly. From the endpoint level of interest rates, the central interest rate in the United States may increase, while interest rates in the eurozone will decrease. Authors: Xiao Lisheng, Yang Zirong (Researcher and Associate Researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences)