The United Nations Department of Economic and Social Affairs (UN DESA) has warned that the world economy is in a fragile state, as growing trade disputes and unclear government policies could lead to serious problems.
In a report released on Thursday, UN DESA noted that price pressures driven by tariffs are fuelling inflationary risks, particularly for economies heavily reliant on international trade.
The report highlighted that rising tariffs and shifting trade policies are disrupting global supply chains, increasing production costs, and delaying critical investment decisions, factors that are collectively undermining the outlook for global growth.
The slowdown, according to the report, is widespread, affecting both developed and developing countries. In the United States, for instance, growth is forecast to slow “significantly,” as elevated tariffs and policy unpredictability dampen private investment and consumer spending.
Major developing economies such as Brazil and Mexico are also seeing their growth forecasts revised downward.
China’s economy is projected to grow by 4.6 per cent in 2025, down from 5.0 per cent in 2024. The deceleration is attributed to weakening consumer confidence, disruptions in export-driven manufacturing, and persistent challenges in the property sector.
By early 2025, inflation had exceeded pre-pandemic levels in two-thirds of countries worldwide, with more than 20 developing nations experiencing double-digit inflation. This trend persists despite global headline inflation easing between 2023 and 2024.
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Food inflation remains especially high in Africa, and in South and Western Asia, where it continues to average above six per cent, placing a disproportionate burden on low-income households.
UN DESA further warned that rising trade barriers and climate-related shocks are exacerbating inflationary pressures, underscoring the urgent need for coordinated policy action to stabilise prices and shield vulnerable populations.
“The tariff shock risks hitting vulnerable developing countries hard,” said Li Junhua, UN Under-Secretary-General for Economic and Social Affairs.
The report also noted that central banks face a delicate balancing act between containing inflation and supporting faltering economies. However, many governments in developing countries are constrained by limited fiscal space, hindering their ability to respond effectively to the slowdown.
This challenging outlook, the report concluded, threatens to undermine efforts in many developing nations to create jobs, reduce poverty, and address inequality.
