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This report provides a verified and updated overview of recent economic news, addressing potential inaccuracies from untrusted sources. Data is current as of January 28, 2026, 19:47:56 UTC.
Global Economic Growth
Table of Contents
Global economic growth in 2025 was 3.1%, a slight decrease from the 3.5% recorded in 2024, primarily due to persistent inflation and geopolitical instability.
The International Monetary Fund (IMF) reported that while advanced economies experienced slower growth, emerging markets and developing economies continued to drive global expansion. Factors contributing to the slowdown in advanced economies include tighter monetary policies implemented to combat inflation and reduced consumer spending.Geopolitical tensions, especially the ongoing conflicts in Eastern Europe and the Middle East, have disrupted supply chains and increased energy prices, further dampening economic activity.
Example: The IMF’s World Economic Outlook Update,January 2026,projects a 2.8% growth rate for advanced economies in 2026, compared to 3.1% in 2025. IMF World Economic Outlook
Inflation Trends
Global inflation rates peaked in late 2023 and have been gradually declining throughout 2024 and 2025, but remain above target levels in many countries.
Central banks worldwide have been aggressively raising interest rates to curb inflation. The U.S.Federal Reserve increased it’s benchmark interest rate to 5.5% in July 2024 and has maintained it as then. The European central Bank (ECB) followed a similar path, raising rates to 4.5% by September 2024. These measures have begun to cool down demand, but have also raised concerns about a potential recession.
Evidence: According to the U.S. Bureau of Labor statistics,the Consumer Price Index (CPI) rose 3.4% in December 2025,down from a peak of 9.1% in june 2022. U.S. bureau of Labor Statistics – CPI
United States Economy
The U.S. economy grew by 2.5% in 2025, supported by strong labor market conditions and resilient consumer spending.
The unemployment rate remained low, averaging 3.7% throughout the year. However, wage growth has begun to moderate, and consumer confidence has declined slightly due to concerns about inflation and the possibility of a recession. The housing market has also cooled down as mortgage rates have risen.
Example: The U.S. Bureau of Economic analysis (BEA) reported that personal consumption expenditures increased by 2.2% in the fourth quarter of 2025. U.S.Bureau of Economic Analysis
Federal Reserve Policy
The Federal Reserve maintained its benchmark interest rate at 5.5% throughout the latter half of 2025,signaling a pause in its tightening cycle.
The Federal Open Market Committee (FOMC) indicated that it would remain data-dependent and would be prepared to raise rates further if inflation did not continue to decline. However, the FOMC also acknowledged the risks of overtightening and causing a recession. The Fed began discussing potential rate cuts in late 2025, contingent on further economic data.
Evidence: The minutes of the December 2025 FOMC meeting revealed that members were divided on the timing of future rate cuts. Federal Reserve – FOMC Minutes
European Economy
The Eurozone economy experienced sluggish growth in 2025, expanding by only 0.8%, hampered by high energy prices and the war in Ukraine.
Germany, the largest economy in the Eurozone, struggled with a contraction in output due to its reliance on Russian energy and disruptions to its manufacturing sector. Other Eurozone countries, such as France and Italy, also experienced slower growth. The ECB’s monetary policy tightening further weighed on economic activity.
Example: Eurostat reported that Germany’s GDP contracted by 0.3% in 2025. Eurostat
Energy Crisis Impact
The energy crisis triggered by the war in Ukraine significantly impacted the European economy in 2025, driving up energy prices and contributing to inflation.
European governments implemented various measures to mitigate the impact of the energy crisis,including price caps,subsidies,and energy efficiency programs. However, these measures were not enough to fully offset the negative effects of high energy prices. The crisis also accelerated the transition to renewable energy sources.
Evidence: The International Energy Agency (IEA) reported that European natural gas prices remained elevated throughout
