This blog post contains insights from the Global Economic Outlook session that took place on January 24th, 2025 with featured panellists: Faisal Alibrahim (Minister of Economy and Planning, Saudi Arabia), Kristalina Georgieva (Managing Director, International Monetary Fund). Laurence Fink (CEO, BlackRock), Christine Lagarde (President, European Central Bank), and Tharman Shanmugratham (President of Singapore).
Introduction - A Pivotal Moment
With market shocks and political unrest characterizing the global landscape in recent years, the world finds itself in a delicate economic balance. Simultaneously, opportunities abound as technological advancements and new collaborative frameworks offer pathways to resilience and prosperity. Against this backdrop, the insights shared during the Global Economic Outlook session at the World Economic Forum 2025 underscore an urgent call to action. To foster sustainable and inclusive growth, leaders must embrace bold, transformative strategies that bridge ideological divides, leverage innovative solutions, and prioritize collective action over fragmented efforts.
This article is divided into two parts, the first highlights key global economic risks outlined in the Global Economic Outlook Report, and the second, highlights potential solutions and their pathways as discussed by panel members.
Part 1 - Global Economic Risks
Table 1. Global Economic Risks - WEF Report
Risk | Overview |
Persistent Global Economic Fragmentation | The ongoing trend of economic fragmentation is poised to disrupt global supply chains further. According to the WEF Global Economic Outlook, 94% of chief economists predict increased fragmentation over the next three years due to protectionist policies and geopolitical rivalries. This dynamic inflates costs for businesses and consumers, undermines economic efficiency, and hampers international trade. |
Rising Sovereign Debt | Global public debt reached a staggering $100 trillion in 2024, equating to 115% of global GDP, and is projected to climb further. This fiscal pressure constrains governments’ ability to address critical issues such as aging populations, climate adaptation, and national security. |
Inflation Price and Pressures | While inflation has moderated in some regions, it remains a significant concern, averaging 4.3% globally in 2025. Persistent core services inflation in advanced economies poses challenges to monetary policy and household purchasing power. |
Decline in Global Cooperation | A troubling 81% of economists expect diminished global collaboration on climate change and other critical issues. This decline threatens to exacerbate vulnerabilities in decarbonization efforts and long-term economic stability. |
Regional Economic Divergences | While South Asia, led by India, is forecast to grow at 5.4%, regions like Europe and China face stagnation. Such disparities highlight the uneven nature of global economic recovery and development. |
Weak Productivity in Emerging Markets | Productivity in emerging markets has declined significantly, dropping from 2.5% to 0.7% in the past decade. This undermines growth potential and increases dependency on external capital flows, which are also at risk due to fragmentation. |
Part 2 - Pathways to Prosperity: Collaborative Solutions for a Resilient Global Economy
Restoring Optimism and Confidence
Restoring optimism and confidence in global markets is key to counteracting stagnation and driving growth over the next few years. Effective solutions must focus on actionable strategies that inspire trust, stimulate investment, and promote economic activity. For regions like Europe, where economic sentiment has been notably pessimistic, targeted initiatives can reignite optimism. Kristalina Georgieva, Managing Director of the IMF, highlights the need for Europe to embrace bold, decisive leadership to foster innovation and align with the dynamic pace of regions like the U.S. Innovation and inclusivity must also be central to restoring confidence. Developing programs that empower SMEs, increase access to financing, and prioritize workforce development can help bridge economic divides and create a sense of shared prosperity. Countries like Denmark and Finland, which have implemented robust social safety nets and accessible education systems, demonstrate how such measures can simultaneously boost public confidence and economic productivity.
Unlocking Capital Flows
The market serves as a vital barometer for politicians, central bankers, businesses, and policymakers, reflecting the underlying health and direction of the global economy, as emphasized by Laurence Fink, CEO of BlackRock. One critical insight it reveals is that countries capable of unlocking new capital flows post-pandemic have experienced higher value creation and greater resilience to shocks. This claim is supported by the International Monetary Fund (IMF), which found that emerging market economies over 15 years with greater openness to capital flows saw higher GDP growth rates of approximately 0.4 percentage points in only a few years and increased gross capital flows.
Private capital plays a pivotal role in this process. Fink highlights the urgency of deploying private capital more efficiently, enabling both traditional and emerging sectors to adapt to economic volatility and become more independent of broader political and economic risks. This perspective is supported by Georgieva, who noted that the U.S. leads in productivity growth, owing in part to the dynamic allocation of venture capital across a diverse range of industries. In 2022, U.S. venture capital investments totalled $241.4 billion according to PitchBook - NCVA Venture Monitor, representing a critical driver of innovation and economic stability. According to the World Economic Forum, countries with deep and diverse capital markets are better equipped to attract private investment, which contributes to long-term economic growth and stability. For example, the U.S. venture capital ecosystem is a major enabler of technology adoption, contributing significantly to its 2.7% GDP growth in 2024. By diversifying investments and prioritizing efficient deployment, countries can drive productivity, enhance economic resilience, and lay the groundwork for future prosperity.
A New Era of Collaboration
Today, the global population is over 8 billion people, the trajectory of human progress has been defined by a balance of collaboration and competition, a dynamic that must continue to evolve, as noted by the Director of the IMF. The past decades have seen periods of geopolitical stalemates, marked by strained relationships between key powers like the U.S. and China and divisions within nations. Breaking this cycle requires bold leadership and new models of collaboration.
Collaboration on a global scale is not optional—it is a necessity. Agreements and initiatives must bridge ideological divides between major economic powers, recognizing the deep interconnections of their economies. Leadership needs to evolve to become bold but inclusive, disruptive but constructive, ingrained in the long view but also action-oriented to address current challenges.
Social Policy at an Industrial Scale
As global economies face mounting challenges, the inclusion of citizens in shaping economic futures has become more crucial than ever. President Tharman highlighted that social policy is one of the most neglected strategies worldwide—a critical oversight that must be addressed urgently to unlock sustainable growth and resilience. The foundation of this transformation lies in developing frameworks that maximize human potential across all segments of society. This means investing in education, reskilling, and lifelong learning programs that prepare citizens for rapidly evolving industries such as renewable energy, artificial intelligence, and healthcare. Countries that proactively prioritize workforce readiness will gain a significant competitive edge, as their populations can better adapt to emerging opportunities. Investing in social policy at an industrial scale is not only a moral imperative but also an economic necessity. By aligning policies to maximize human potential, countries can ensure that their populations are not left behind in a rapidly transforming global economy.
Conclusion
The challenges outlined are daunting but not insurmountable. By embracing innovative solutions and fostering inclusive collaboration, global leaders can turn risks into opportunities. The path forward hinges on embracing transparency, leveraging advanced technologies, and cultivating international collaboration to ensure a balanced and thriving global economy.
This pivotal moment in history presents an opportunity to reflect on key questions that should guide future action: How can we better align economic policy with long-term societal needs? What steps are necessary to harmonize global cooperation in the face of geopolitical and environmental challenges? And how can we mobilize private and public sectors to create shared value?
Appendix of Resources