Global growth to slow to 2.3% in 2025: UNCTAD

Global growth is forecast to slow to 2.3% in 2025, slipping below the 2.5% threshold often associated with a global recession, UN Trade and Development (UNCTAD) said in its latest report. This marks a sharp deceleration compared to already sluggish pre-pandemic growth rates.

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UNCTAD warns that rising uncertainty is weighing heavily on the global economy. Trade tensions are escalating, with recent tariff hikes undermining predictability. Rising fragmentation, if left unchecked, could deepen the downturn.

Trade policy uncertainty, now at historic highs, is eroding business confidence and reshaping global trade patterns. Manufacturers and investors are delaying decisions, reassessing supply chain strategies and stepping up risk management efforts.

After a temporary surge at the end of 2024, merchandise trade momentum is fading, with the Shanghai Containerized Freight Index dropping by 40% between January and March 2025, falling back to pre-pandemic levels.

Record-high economic policy uncertainty is also fuelling financial turbulence. In early 2025, the Economic Policy Uncertainty Index reached its highest level this century, surpassing peaks during the 2008 financial crisis and the COVID-19 pandemic.

In early April, markets saw sharp corrections and heavy losses after weeks of volatility. The so-called financial “fear index" - a gauge of US stock market volatility-reached its third-highest level on record, behind only the peaks seen during the pandemic and global financial crisis.