Following an increase in trade due to advance purchases before the implementation of the new tariffs, the United Nations Conference on Trade and Development (UNCTAD) estimated that global trade growth during the first half of 2025 could fall from 4% to between 2.5% and 3%, “with a slowdown on the horizon . ”
According to the Trade and Development Report 2025 , global economic growth is also projected to slow to 2.6 percent in 2025 , down from the pre-COVID-19 pandemic trend of 3 percent.
UNCTAD’s analysis indicated that economies such as the United States and Europe are slowing down, as is China, while “across the global south, financial volatility and weaker external demand are putting pressure on investment and employment.”
Given this challenging global outlook, developing economies will drive almost 70% of global growth in 2025 , but face the greatest constraints in financing that growth, the organization explained.
Trade has become more sensitive to financial factors , such as fluctuations in interest rates or changes in investor confidence, which affects developing countries, as monetary volatility can make imports and debt repayment more expensive .
“Prices increasingly reflect speculative strategies, not supply and demand. When finance sets food prices, countries have more difficulty ensuring affordable and reliable supplies,” the organization stated.
The unusual situation of a weakening dollar while US Treasury bond yields rise could indicate lower short-term demand for US assets; however, the dollar’s dominance persists , as almost 90% of global foreign exchange trading (the buying and selling of currencies needed for global payments) involves the dollar.
“The dollar’s influence goes far beyond central bank reserves or trade pricing. It affects who can access credit, where investment flows, and how quickly financial crises spread around the world,” the report explained.
UNCTAD highlighted that developing countries now account for more than 40% of global merchandise production and trade , and almost 60% of global Foreign Direct Investment (FDI) inflows , up from 22% in the mid-2000s.
“However, their participation in global financial markets remains low, at 25%, and has even decreased, a mismatch that limits their development. Excluding China, developing countries control only 12% of the value of the global stock market and 6% of the global bond market,” he noted.
The report warned that domestic financial markets have not kept pace, leaving many developing countries dependent on foreign banks and markets, “often with high and volatile interest rates.”
Given this scenario, the report stressed the need to build economies that can withstand shocks , adapt to transitions, and grow sustainably even under conditions of uncertainty.
In that regard, the analysis suggested reforming the global financial system to support climate-vulnerable countries; expanding regional financial cooperation; strengthening national financial ecosystems; addressing emerging financial risks beyond the banking sector; and promoting “networked multilateralism,” UNCTAD concluded.
According to the United Nations report , the projected global economic slowdown by 2025 would be driven by increasing volatility in financial markets and geopolitical uncertainty , factors that are putting pressure on trade and investment worldwide.
Comment and follow us on X: @GrupoT21
