Global Economy Faces Slowdown As UNCTAD Predicts 2.3% Growth Rate For 2025 Amid Trade Tensions

The global economy is facing a downturn, influenced by increasing trade tensions and ongoing uncertainty, according to a new report from the United Nations Conference on Trade and Development (UNCTAD). The report, titled "Trade and Development Foresights 2025 – Under pressure: Uncertainty reshapes global economic prospects," predicts that worldwide growth will decelerate to 2.3% by 2025, indicating a recessionary trend.

UNCTAD's findings highlight several risks threatening the global economic outlook. These include disruptions from trade policy changes, financial instability, and heightened uncertainty. Rising trade tensions are particularly concerning as recent tariffs disrupt supply chains and reduce predictability in international trade.

The slowdown is expected to affect all countries, but developing nations are at greater risk. UNCTAD expresses particular concern for low-income countries facing deteriorating external financial conditions, unsustainable debt levels, and weakening domestic growth. These factors create a "perfect storm" that threatens their economic stability.

UNCTAD stresses the importance of addressing these challenges to safeguard economic growth, investment, and development progress in vulnerable economies. The organisation highlights the potential of South-South trade as a source of resilience for developing countries.

South-South trade already constitutes about one-third of global trade. UNCTAD notes that further economic integration among developing countries could provide significant opportunities for growth. This integration could help mitigate some of the adverse effects of current global economic challenges.

The report calls for enhanced dialogue and negotiation among nations. It also emphasises the need for stronger regional and global policy coordination to build on existing trade and economic relationships.

Coordinated Global Action

According to UNCTAD, coordinated efforts are crucial to restoring confidence in the global economy and ensuring continued development progress. By working together, countries can better navigate the uncertainties reshaping global economic prospects.

The report concludes with a call for collective action to maintain development momentum despite the challenging environment. Such cooperation is deemed essential for keeping economies on track amid rising uncertainties.

With inputs from WAM