The world economy is on a recessionary trajectory, driven by escalating trade tensions and persistent uncertainty, UN Trade and Development (UNCTAD) alerts in its new report, “Trade and Development Foresights 2025”. Global growth is projected to slow to 2.3% in 2025, placing the world economy on a recessionary path, the report says.

     Rising trade tensions are impacting global trade, with UNCTAD noting that recent tariff measures are disrupting supply chains and undermining predictability. “Trade policy uncertainty is at a historical high,” the report notes, “and this is already translating into delayed investment decisions and reduced hiring.”It cites mounting threats including trade policy shocks, financial volatility and a surge in uncertainty that risk derailing the global outlook.

    The slowdown will affect all nations, but UNCTAD remains concerned about developing countries and especially the most vulnerable economies. Many low-income countries face a "perfect storm" of worsening external financial conditions, unsustainable debt and weakening domestic growth. UNCTAD underlines the real threat to economic growth, investment, and development progress, particularly for the most vulnerable economies. UNCTAD points to the growth of trade among developing countries (South-South trade) as a source of resilience. Already accounting for about one third of global trade, “the potential of South-South economic integration offers opportunities for many developing countries”, the report notes. UNCTAD urges dialogue and negotiation, alongside stronger regional and global policy coordination, building on existing trade and economic ties.