The global economy is at a fragile turning point due to rising trade tensions and growing policy uncertainties, according to a report released on Thursday by the United Nations Department of Economic and Social Affairs (UN DESA).
The report highlights that tariff-driven price pressures are contributing to inflation risks, leaving trade-dependent economies particularly vulnerable.
UN DESA warns that “higher tariffs and shifting trade policies” are threatening global supply chains, increasing production costs, and delaying key investment decisions, all of which could further weaken global growth prospects.
The economic slowdown, the report notes, is broad-based, affecting both developed and developing economies. In the United States, for example, growth is expected to “slow significantly” due to the impact of higher tariffs and uncertainty around policy direction, which are expected to suppress private investment and consumer spending.
Brazil and Mexico are also seeing downward revisions to their growth projections, while China’s economy is now forecast to grow by 4.6% in 2025, down from 5.0% in 2024. The report attributes China’s deceleration to “a weakening in consumer confidence, disruptions in export-driven manufacturing, and ongoing challenges in the Chinese property sector.”
Globally, inflation remains a pressing issue. As of early 2025, two-thirds of countries had inflation rates above pre-pandemic averages, and more than 20 developing economies were grappling with double-digit inflation.
Even though global headline inflation eased between 2023 and 2024, food inflation remains particularly high in Africa and South and Western Asia, averaging over 6% and disproportionately affecting low-income households.
The report also links inflationary pressures to rising trade barriers and climate-related shocks, stressing the urgent need for coordinated international policies to stabilize prices and protect vulnerable populations.
“The tariff shock risks hitting vulnerable developing countries hard,” said Li Junhua, UN Under-Secretary-General for Economic and Social Affairs, in a statement.
As central banks attempt to strike a balance between taming inflation and supporting sluggish economies, the report points out that many developing countries have limited fiscal space, making it difficult for them to respond to the downturn.
UN DESA concludes that the challenging global outlook poses serious threats to job creation, poverty reduction, and efforts to address inequality, especially in the most economically fragile nations.
