Kearney's Global Economic Outlook 2025-2027 suggests "uncharted territory" for the world economy

• The global economy faces an increasingly fragmented economic landscape for the foreseeable future.
  
  
• US tariff announcements, rising geopolitical risk, and broader economic policy uncertainty are fueling a marked deceleration of global growth prospects.
  
  
• The Middle East and Africa edges ahead of Asia and Australasia as the world's fastest-growing region over the next three years, while Europe and Eurasia is forecast to grow the most slowly.
  
  
• Scenario analysis suggests elevated levels of downside risk, with three of four scenarios falling below baseline projections of 2.5 percent average output growth through 2027.

WASHINGTON, May 22, 2025 /PRNewswire/ -- Kearney's Global Business Policy Council today released its Global Economic Outlook 2025–2027: 1H 2025 report, entitled "Uncharted territory." The report explores rising uncertainty in the global operating environment, projecting 2.3 percent global output growth for this year and next, followed by a modest rebound to 2.9 percent in 2027. This 2025–2027 average of 2.5 percent growth marks a decline from the 2.8 percent projected in January, both well below pre-pandemic levels that routinely exceeded 3 percent.

The Middle East and Africa emerges as the fastest-growing region in the world, buoyed by its relative resilience to the economic fallout from US tariffs. The region's 2025–2027 average growth forecast edges ahead of Asia and Australia by 0.1 percent, with anticipated average output growth of 3.6 percent. The Americas is projected to see 1.9 percent average growth between 2025 and 2027, reflecting an acute slowdown in the United States, where 2025 growth is projected to fall to 1.3 percent. Europe and Eurasia is projected to be the slowest-growing region, with average output of just 1.3 percent over the forecast period.

From a global sectoral point of view, tariff-related uncertainty is likely to result in a shallow recession in global industry, though growth will remain positive in annual terms. Activity is projected to weaken sharply in sectors reliant on imported inputs, such as automotives. However, global services will be more insulated overall, with the exception of service industries that support manufacturing and trade, such as ocean freight and logistics.

Five factors will be especially important in determining the future of the global economy through 2027: geopolitical risk, industrial policy and tariffs, institutional stability, technological disruption, and environmental degradation. To account for the high degree of uncertainty in the economic outlook, the report features four distinct scenarios that explore divergent trajectories for the aforementioned factors and their interplay. With economic modeling, the impact of each of these scenarios on growth is quantified at the global and regional levels. This analysis suggests elevated downside risks, with three of the four scenarios falling below the projected 2.5 percent baseline average through 2027. The analysis finds that this number could range from as low as
-1.8 percent to as high as 2.6 percent, depending on how these key factors unfold.

"Strategic businesses will engage in scenario planning to account for the wide range of plausible futures that could materialize in this volatile global operating environment," says report co-author Erik R. Peterson, partner and managing director of Kearney's Global Business Policy Council. Terry Toland, principal at Kearney's Global Business Policy Council and co-author of the report, adds "Despite the uncertain economic outlook, there are still areas of opportunity for business. Companies that monitor and leverage the growing number of industrial policies and invest in innovation will be best placed to navigate elevated levels of volatility."

About Kearney

Since 1926, Kearney has been a leading management consulting firm and trusted partner to three-quarters of the Fortune Global 500 and governments around the world. With a presence across more than 40 countries, our people make us who we are. We work impact first, tackling your toughest challenges with original thinking and a commitment to making change happen together. By your side, we deliver—value, results, impact.

To learn more about Kearney, please visit www.kearney.com.

For past editions of the Global Economic Outlook, please go to: https://www.kearney.com/service/global-business-policy-council/thought-leadership/global-economic-outlook.

For more information, contact the Global Business Policy Council ([email protected]).

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SOURCE Kearney