By: Digital Newspaper
Date: June 22, 2025
WASHINGTON / BERLIN / BUENOS AIRES / ISLAMABAD — As the world continues to navigate the post-pandemic recovery, a troubling pattern has emerged: while some major economies are enjoying falling inflation and cautious optimism, others are spiraling into recession, debt crises, and unemployment. The divide between developed and emerging markets has widened in 2025, raising urgent questions about the future of global economic stability.
According to the International Monetary Fund’s (IMF) June outlook, advanced economies such as the United States, Germany, and Canada are experiencing inflation relief and modest GDP growth. In contrast, Argentina, Sri Lanka, Turkey, and Pakistan face dire fiscal challenges, spiraling inflation, and the risk of sovereign default.
WHERE RELIEF IS FELT
- United States: Inflation dropped to 3.5% in Q2, leading the Federal Reserve to pause interest rate hikes. Consumer confidence rebounded, and unemployment sits at 4.1%.
- Germany: Energy prices stabilized after two volatile years. The economy grew by 1.2% in Q1, helped by exports and EU subsidies for green transition.
- Canada: Real estate recovery and tech-driven investment in AI and clean energy boosted domestic productivity.
These economies benefit from strong institutions, diversified industries, and robust monetary policy. Their success stories, however, are far from universal.
STRUGGLING MARKETS AND RECESSION RISKS
- Argentina: With inflation at 190% and IMF loan talks stalled, the country declared a technical recession in May. Social unrest and dollarization debates intensify.
- Sri Lanka: Debt restructuring delays and a collapsed tourism sector pushed GDP growth into negative territory again in Q2.
- Pakistan: The rupee lost over 25% of its value in 6 months. Inflation remains near 30%, with a stalled IMF review and rising food insecurity.
- Turkey: Interest rates were raised to 50% to tame inflation, but investor confidence continues to slide, and capital flight threatens reserves.
According to World Bank data, over 55% of developing economies are at risk of debt distress or default by the end of 2025.
EXPERT VIEWS
“We are witnessing a two-speed world economy,” said Dr. Maria Ortega, an economist at the London School of Economics. “One side is cautiously recovering, while the other struggles to prevent collapse. This will have ripple effects on trade, migration, and geopolitics.”
The widening gap threatens global development goals. Food insecurity, education disruption, and deteriorating health systems in poorer nations risk reversing years of progress. The UN estimates that over 70 million people may be pushed back into extreme poverty by 2026.
POLICY RESPONSES AND DEBATES
G20 and IMF: Have proposed special funds to support low-income nations, including debt service suspension and climate-resilient infrastructure investment. However, consensus on implementation remains elusive.
Central Banks: Mixed approaches dominate. While the U.S. and EU move toward rate cuts, emerging markets are forced to hike rates despite their recession risks.
Local Governments: Many are implementing austerity measures, risking public backlash. Others, such as Brazil and Indonesia, are pushing stimulus through infrastructure and green investment despite borrowing costs.
CONCLUSION: A FRAGILE FUTURE
The global economy faces a critical juncture. Unless coordinated international support is mobilized, today’s economic divide may lead to tomorrow’s global instability. Trade partnerships, climate cooperation, and migration policy will all be shaped by how governments respond in this moment.
“This isn’t just an economic issue—it’s a humanitarian one,” said UNCTAD’s Secretary-General Rebeca Grynspan. “Recovery must be inclusive, or it won’t be recovery at all.”