Global Economy at Fragile Turning Point Amid Trade Tensions and Inflation Risks — UN Report
UN Warns of Looming Economic Slowdown Across Developed and Developing Nations
The United Nations Department of Economic and Social Affairs (UN DESA) has issued a sobering warning, declaring that the global economy is at a fragile turning point, increasingly strained by escalating trade tensions and inflation risks.
In a comprehensive report released on Thursday, the UN body said that rising tariffs, shifting trade policies, and deepening policy uncertainty are disrupting global supply chains, slowing investments, and increasing costs — all of which threaten to stall growth across both developed and developing economies.
“The tariff shock risks hitting vulnerable developing countries hard,” stated Li Junhua, UN Under-Secretary-General for Economic and Social Affairs.
Tariff Hikes and Trade Policy Shifts Worsen Inflation Risks Globally
According to the report, tariff-driven price pressures are mounting across international markets. These price shocks are not only fueling inflation but also leaving trade-dependent economies increasingly exposed to economic volatility.
UN DESA stressed that these economic headwinds are causing serious delays in investment decisions and raising production costs, which could derail economic recovery efforts post-COVID-19.
“Higher tariffs and the uncertainty around trade rules are making it harder for countries to grow their economies sustainably,” the report noted.
Growth Slowing in the US, China, and Major Developing Economies
The UN warned that the economic slowdown is broad-based and is affecting both advanced and emerging markets.
In the United States, growth is projected to slow “significantly” in 2025 as a result of higher tariffs and persistent policy uncertainty, which are undermining both consumer confidence and business investment.
China, the world’s second-largest economy, is forecast to grow by 4.6% in 2025, down from 5.0% in 2024. The deceleration is being driven by declining consumer sentiment, export manufacturing disruptions, and the ongoing crisis in its property sector.
Other major developing countries, including Brazil and Mexico, are also facing downward revisions in their growth prospects.
Double-Digit Inflation Strains Developing Economies
The UN report reveals that inflation has exceeded pre-pandemic levels in two-thirds of countries globally. As of early 2025, over 20 developing economies are grappling with double-digit inflation, despite a decline in global headline inflation between 2023 and 2024.
Food inflation remains particularly persistent in Africa, South Asia, and Western Asia, averaging over 6%, disproportionately affecting low-income households.
“Rising trade barriers and climate-related shocks are further fueling inflation,” the report stated, emphasizing the need for coordinated policy responses to manage inflation and support vulnerable populations.
Fiscal Constraints Limit Developing Nations’ Response Capacity
As central banks around the world struggle to balance inflation control with the need to support weakening economies, many developing countries are finding themselves hamstrung by limited fiscal space.
This limited financial capacity is making it increasingly difficult for them to implement economic stimulus programs, provide social protection, or invest in growth-promoting sectors like infrastructure and education.
UN DESA highlighted that the bleak economic landscape could jeopardize progress on poverty reduction, job creation, and efforts to combat inequality.
“For many developing countries, the road ahead is uncertain and demanding. Without strong international support and internal reforms, their development goals may remain out of reach,” the report cautioned.
Coordinated Global Policy Urgently Needed to Avert Deeper Crisis
The report concludes by calling for global cooperation, urging major economies and multilateral institutions to work together to stabilise markets, ensure fair trade practices, and shield vulnerable nations from cascading economic shocks.
The fragile nature of the global economy, the UN warns, demands proactive policy responses — not just domestically, but across international partnerships — to avoid prolonged stagnation or a deeper global recession.
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Global economy at fragile turning point
trade tensions and inflation risks
