New Delhi, May 16 (UNI) Global economy is at a precarious moment following heightened trade tension, the United Nations has warned.
Heightened trade tensions along with policy uncertainty have significantly weakened the global economic outlook for 2025, the Department of the Economic and Social Affairs of the United Nations said in a report.
"Higher tariffs resulting in a significant increase in the effective tariff rate in the United States are likely to strain global supply chains, drive up production costs and delay critical investment decisions while also contributing to financial market volatility,’’ the mid-year report ‘World Economic Situation and Prospects-2025’ says.
It says global economic growth is now projected to slow to 2.4 per cent in 2025, down from 2.9 per cent in 2024. The downward revisions in growth forecasts are broad-based affecting both developed and developing economies.
Weakening global trade growth and investment flows are compounding the slowdown. Many trade-reliant developing countries face mounting challenges from reduced exports, lower commodity prices, tighter financial conditions and elevated debt burdens.
‘’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,’’ Li Junhua, UN Under-Secretary General for Economic and Social Affairs said.
The report, while admitting that inflation is easing globally, says short-term risks from tariff-driven cost pressures and uncertainty are adding to policy challenges. Addressing them requires a broad toolkit that combines monetary policy, fiscal measures, supply-side reforms, and industrial strategies to stabilize prices and foster resilience.
“The deteriorating economic outlook is further undermining progress towards Sustainable Development Goals many of which are already off track. Slower growth and persistent cost-of-living pressures risk deepening inequalities, disproportionately burdening low-income households and vulnerable populations,’’ according to the report.
Meanwhile, persistent weakness in global investment growth drags down long-term economic prospects, the report says.
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