Kearney outlook report finds global economy on ‘unsteady ground’

Kearney’s 2H Global Economic Outlook 2025-2027 – titled “Unsteady Ground” – expects a period of structural volatility defined by slowing growth and intensifying fragmentation.

The forecast projects global average growth of 2.7% through 2027, a modest improvement from the 1H 2025 projection.

Developing regions are expected to have higher growth rates. Australasia will be the fastest-growing region at an average of 3.7%, powered by India. The Middle East and Africa will follow close behind, with an estimated 3.5% growth, driven by strategic investments and economic diversification.

The Americas and Europe are projected to have growth of 2.1% and 1.3% respectively.

Kearney says that structural (and not temporary) issues in the global economy – such as economic policy uncertainty, sticky inflation, geopolitical risk, and spreading protectionism – will provide continued downside pressure on growth.

Although AI investment is partially offsetting some short-term pressures, the deeper forces will continue to reshape the global landscape, the strategy firm says.

“Volatility and fragmentation are no longer temporary shocks – they are the new baseline,” said Erik Peterson, partner and managing director of Kearney’s Global Business Policy Council. “Businesses must adapt to a world where competitive advantage depends as much on navigating geopolitical risk and resilience as on innovation and efficiency.”

AI investment is projected to reach $375 billion in 2025 and up to $500 billion by 2026. Although the technology promises productivity gains of up to 1.3% annually, Kearney warns the benefits may accrue among leading firms and economies – further amplifying inequality.