Page 7 - Policy Economic Report_Feb'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Regional Growth Dynamics

• Advanced economies: In the United States, underlying demand remains robust, reflecting strong
wealth effects, a less restrictive monetary policy stance, and supportive financial conditions.
Growth is projected to be at 2.7% in 2025. This is 0.5% point higher than the October forecast, in
part reflecting carryover from 2024 as well as robust labor markets and accelerating investment,
among other signs of strength. Growth is expected to taper to potential in 2026.

• In the euro area, growth is expected to pick up but at a more gradual pace than anticipated in
October, with geopolitical tensions continuing to weigh on sentiment. Weaker-than-expected
momentum at the end of 2024, especially in manufacturing, and heightened political and policy
uncertainty explain a downward revision of 0.2 percentage point to 1.0 percent in 2025. In 2026,
growth is set to rise to 1.4 percent, helped by stronger domestic demand, as financial conditions
loosen, confidence improves, and uncertainty recedes somewhat.

• In other advanced economies, two offsetting forces keep growth forecasts relatively stable. On
the one hand, recovering real incomes are expected to support the cyclical recovery in
consumption. On the other hand, trade headwinds—including the sharp uptick in trade policy
uncertainty-are expected to keep investment subdued.

• In emerging market and developing economies, growth performance in 2025 and 2026 is expected
to broadly match that in 2024. With respect to the projection in October, growth in 2025 for China
is marginally revised upward by 0.1 percentage point to 4.6 percent. In India, growth is projected
to be solid at 6.5 percent in 2025 and 2026, as projected in October and in line with potential.

• In the Middle East and Central Asia, growth is projected to pick up, but less than expected in
October. This mainly reflects a 1.3 percentage point downward revision to 2025 growth in Saudi
Arabia, mostly driven by the extension of OPEC+ production cuts. In Latin America and the
Caribbean, overall growth is projected to accelerate slightly in 2025 to 2.5 percent, despite an
expected slowdown in the largest economies of the region.

• Growth in sub-Saharan Africa is expected to pick up in 2025, while it is forecast to slow down in
emerging and developing Europe.

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