The UN Conference on Trade and Development (UNCTAD) has projected that global economic growth will decelerate to 2.3% in 2025, dipping below the 2.5% threshold often associated with recession.

The report highlights that trade policy uncertainty is at a historical peak, disrupting supply chains and causing companies to delay investments and hiring.

Developing economies are facing a 'perfect storm' of worsening external conditions, high debt burdens, and declining domestic growth, with many low-income countries at risk of debt distress.

This anticipated slowdown marks a significant decline compared to the already subdued pre-pandemic average annual growth rates.

Investor anxiety is on the rise, with fears of a recession in the U.S. escalating due to tariff-related concerns, contributing to the highest levels of the financial 'fear index' since 2008.

UNCTAD advocates for enhanced international policy coordination and stronger regional trade ties to restore confidence and support development progress.

Emerging risks are particularly pronounced for vulnerable economies, driven by subdued demand, trade policy shocks, and ongoing financial turbulence.

Ongoing trade restrictions and geo-economic confrontations are expected to severely disrupt international trade and production lines, further impacting global economic activity.

Despite these challenges, the growth of South-South trade among developing countries, which now accounts for about one third of global trade, presents a potential source of resilience.

Latin America's growth projection for 2025 stands at 2.3%, buoyed by Argentina's recovery, which is expected to offset slowdowns in Brazil and Mexico.

The report underscores that developing countries, particularly in Asia, are especially vulnerable to the financial volatility stemming from escalating trade tensions.

Development finance faces significant pressure, with official development assistance projected to decline by 18% from 2023 to 2025, jeopardizing progress towards Sustainable Development Goals.