The UN Department of Economic and Social Affairs has said the global economy stands at a fragile turning point amid escalating trade tensions and growing policy uncertainties.
In a report published on Thursday, UN DESA stated that tariff-driven price pressures added to inflation risks, leaving trade-dependent economies particularly vulnerable.
It stated that higher tariffs and shifting trade policies were threatening to disrupt global supply chains, raise production costs, and delay key investment decisions, all of this weakening the prospects for global growth.
The economic slowdown is widespread, affecting both developed and developing economies around the world, according to the report. For instance, in the United States, growth is projected to slow “significantly”, as higher tariffs and policy uncertainty are expected to weigh on private investment and consumer spending.
Several major developing economies, including Brazil and Mexico, are also experiencing downward revisions in their growth forecasts.
China’s economy is expected to grow by 4.6 per cent this year, down from 5.0 per cent in 2024. This slowdown reflects a weakening in consumer confidence, disruptions in export-driven manufacturing, and ongoing challenges in the Chinese property sector.
By early 2025, inflation had exceeded pre-pandemic averages in two-thirds of countries worldwide, with more than 20 developing economies experiencing double-digit inflation rates.
This comes despite global headline inflation easing between 2023 and 2024.
Food inflation remained especially high in Africa and South and Western Asia, averaging above six per cent. This continues to hit low-income households hardest.
Rising trade barriers and climate-related shocks are further driving up inflation, highlighting the urgent need for coordinated policies to stabilise prices and protect the most vulnerable populations.
“The tariff shock risks hitting vulnerable developing countries hard,” Li Junhua, UN under-secretary-general for Economic and Social Affairs, said in a statement.
As central banks try to balance the need to control inflation with efforts to support weakening economies, many governments, particularly in developing countries, have limited fiscal space.
This makes it more difficult for them to respond effectively to the economic slowdown.
The report underlines that this challenging economic outlook threatens efforts to create jobs, reduce poverty, and tackle inequality for many developing countries.
(NAN)
