The latest Kearney Global Economic Outlook, issued for the second half of 2025, warns businesses that the global economy is now on "unsteady ground." The report highlights a landscape increasingly characterized by structural volatility, with multiple factors pushing down growth and creating divisions between regions.
Key Themes of the Report
Kearney’s comprehensive analysis underscores that the fluctuations in the global economy are not ephemeral; rather, they are the new standard. These changes are driven by a cocktail of economic policy uncertainty, persistent inflation, rising geopolitical risks, and a shift toward protectionism and industrial policies. Such factors are likely to maintain downward pressures on global economic performance.
Forecasted Growth Rates
The data suggests that global economic growth is set to average around 2.7% through 2027, showing a slight improvement from projections earlier in the year but still lower than initial forecasts made in January. It’s noteworthy that while temporary factors like an uptick in artificial intelligence investment and some regional resilience offer short-term relief, deeper global structural concerns are dominating the economic narrative.
Regional Divergences
The report emphasizes significant disparities across various regions. Asia and Australasia are projected to be the fastest-growing areas, with a growth rate of about 3.7%. India is recognized as a key player in this growth, marking it as the world’s fastest-growing large economy. The Middle East and Africa are not far behind, expected to experience 3.5% growth due to strategic investments and economic diversification.
In stark contrast, the Americas and Europe face much lower growth prospects, with the Americas estimated at 2.1% and Europe trailing at only 1.3%. Such fragmentation reflects the deepening divides in the global economy, leading businesses to adapt their strategies regionally.
The AI Wildcard
Artificial intelligence emerges as a pivotal factor influencing economic dynamics. Global AI investments are expected to reach $375 billion in 2025 and could escalate to $500 billion by 2026. Although AI has the potential to enhance productivity by up to 1.3% annually, Kearney cautions that these benefits might disproportionately favor leading firms and economies, thereby exacerbating inequalities and shifting competitive advantages.
Adapting to New Realities
The message from the report is clear: volatility and fragmentation are here to stay. Erik Peterson, a partner and managing director at Kearney, states, "Businesses must adapt to a world where competitive advantage depends as much on navigating geopolitical risk and resilience as on innovation and efficiency." This implies that firms need to pivot their strategies to embrace not just operational efficiency but also resilience against geopolitical fluctuations.
Organizations are advised to adopt new business models and invest judiciously in resilience rather than solely in efficiency. Intentional alignment with values that resonate with stakeholders—such as employees, customers, and communities—will be vital for long-term success.
Opportunities Amidst Challenges
While the economic landscape may seem daunting, the report stresses that it also presents opportunities. Disruptors equipped to reimagine their operational paradigms and invest in various risk-diversification strategies stand to benefit significantly. Terry Toland, co-author of the report, notes, "On such unsteady ground, the companies that invest in resilience, diversify risk, and lead with purpose will define the next era of global growth."
Kearney’s Reputation and Expertise
Kearney has been navigating the complexities of global markets since 1926, earning a reputation as a leading management consulting firm. In fact, three-quarters of Fortune Global 500 companies and numerous governments rely on Kearney for guidance. Their expertise allows them to tackle complex economic challenges with original insights and collaborative efforts to drive impactful change.
Concluding Observations
In summary, Kearney’s 2H Global Economic Outlook for 2025-2027 paints a picture of a world grappling with underlying economic volatility, regional disparities, and the emergent role of artificial intelligence. All stakeholders must recalibrate their expectations and strategies as they navigate this unsteady terrain. By fostering resilience and a forward-looking mindset, businesses can not only survive but thrive in a rapidly changing global environment.
For more information on Kearney and their Global Economic Outlook reports, visit Kearney.
