Global trade could halve this year, warned the United Nations on Friday, pointing out how all indices point to a global slowdown in growth.
While the report warns that almost all economies will see deceleration including India, the country still remains one of the fastest-growing large economies.
Comparatively, China will slow down to just 4.6% this year, while the US, at the heart of the present tariff war, will fall to 1.6% from last year’s 2.8%.
While most of the other major economies, like the remaining BRICS nations, will see a drop, the European Union’s growth will remain unchanged at 1%.
The bad news doesn’t end there. Global GDP growth is now forecast at just 2.4 per cent in 2025, down from 2.9 per cent in 2024 and 0.4 percentage points below the projection at the beginning of the year.
What has changed since then, as the UN Department of Economic Affairs & Social Justice report hints at, is Trump and his tariff tantrums. “The recent surge in tariffs—driving the effective US tariff rate up steeply—threatens to raise production costs, disrupt global supply chains and amplify financial turbulence,” it says.
“The tariff shock risks hitting vulnerable developing countries hard, slowing growth, slashing export revenues, and compounding debt challenges, especially as these economies are already struggling to make the investments needed for long-term, sustainable development,” said Li Junhua, United Nations Under-Secretary-General for Economic and Social Affairs.
“Uncertainty over trade and economic policies, combined with a volatile geopolitical landscape, is prompting businesses to delay or scale back critical investment decisions,” the report said.
These developments are compounding existing challenges, including high debt levels and sluggish productivity growth, further undermining global growth prospects, the report further added.
The impact is spread out and not just a matter of concern for larger economies. The UN report says the slowdown is broad-based, affecting both developed and developing countries.
Inflation is another big worry. While the general consensus is that prices have stabilised since the chaos of the post-pandemic years, the UN report pointed out that price pressures remain stubbornly high in many economies. In the initial months of this year, inflation exceeded pre-pandemic averages in two-thirds of countries, with over 20 developing economies facing double-digit rates.
