COWRY Assets Management Limited, an investment banking and advisory firm, has urged central banks worldwide to strike a careful balance between ensuring price stability and supporting economic growth. The firm’s latest financial markets review highlights the need for adaptable monetary policies to address a variety of challenges, ranging from persistent inflation in some countries to slowing economic activity in others.
Policymakers face the dual responsibility of addressing short-term economic stabilization while fostering long-term growth amid rising global uncertainty. For economies grappling with high inflation, restrictive monetary policies are necessary, whereas those experiencing subdued inflation and slower growth may require more accommodative stances.
The firm also emphasised the need for complementary fiscal policies to ensure debt sustainability. Gradual but significant fiscal consolidation is vital to avoid economic disruption while incorporating growth-friendly initiatives. Protecting vulnerable populations and maintaining public support for reforms are critical to achieving long-term economic stability.
Cowry Assets further highlighted the importance of multilateral cooperation in tackling global challenges. It stresses adherence to World Trade Organization (WTO) frameworks to enhance transparency, reduce trade distortions, and rebuild a functional dispute settlement system. Strengthening collaboration within a rules-based global trading system is essential to bolster resilience against future shocks.
The firm projected global economic growth to reach 3.3 percent in 2025 and 2026, signaling relative stability. However, this figure falls short of the historical average of 3.7 percent recorded between 2000 and 2019. The uneven pace of recovery highlights regional disparities, with the United States expected to outperform, offsetting weaker growth elsewhere.
Among advanced economies, the United States is forecasted to grow by 2.7 percent in 2025, driven by robust consumer spending, a resilient labor market, and improving financial conditions. In contrast, growth in the Eurozone and Japan is projected to lag due to ongoing geopolitical tensions, supply chain disruptions, and structural challenges.
Emerging markets and developing economies paint a mixed picture. China’s economy is expected to grow by 4.6 percent in 2025, supported by fiscal stimulus, although instability in its property market remains a significant drag. India faces slowing industrial production and weaker export performance, dampening its growth prospects.
In the Middle East and Central Asia, growth is projected to improve but fall short of initial forecasts due to extended OPEC+ production cuts, particularly affecting Saudi Arabia. Meanwhile, Latin America and the Caribbean are expected to achieve modest growth of 2.5 percent in 2025, despite headwinds in major economies. Sub-Saharan Africa is likely to see stronger growth, while emerging and developing Europe may experience a slowdown.
Global inflation is forecast to gradually ease, supported by cooling labor markets and lower energy prices. In the United States, inflation is expected to approach the Federal Reserve’s 2% target by 2025. The Eurozone is anticipated to experience more subdued inflationary pressures, while China is likely to maintain low inflation levels.
Despite this progress, Cowry Assets warns of significant risks to the global economic outlook. Rising protectionist policies, including new tariffs, could reignite trade tensions, disrupt global supply chains, and deter investment, leading to slower growth in the medium term.
Financial and structural risks also persist. While deregulation in some advanced economies may spur short-term growth, excessive rollbacks of safeguards could heighten financial instability, creating global boom-bust cycles. Reduced migration flows may exacerbate labor shortages, lowering potential output and driving inflationary pressures.
Geopolitical tensions, such as conflicts in the Middle East and Ukraine, pose additional risks. Disruptions to trade routes for critical commodities like oil and gas could increase prices, disproportionately impacting commodity-importing nations and fueling stagflationary pressures. A stronger U.S. dollar driven by interest rate differentials may further strain global economies.
Cowry Assets calls for vigilance among policymakers, urging them to prioritize structural reforms and foster international cooperation to navigate these complex challenges. By addressing these issues collectively, central banks and governments can better align monetary and fiscal policies to ensure global economic stability.
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