Developing economies are disproportionately affected by a looming global slowdown amidst escalating trade tensions, according to a new report from the United Nations Trade and Development Agency (UNCTAD).
The UNCTAD’s latest “Trade and Development Outlook 2025” paints a concerning economic picture for the Global South, predicting a decline in global growth to 2.3 percent in 2025, down from 2.8 percent in 2024. The report highlights that developing economies are likely to bear the brunt of this deceleration.
According to the UN agency, a “cocktail of risks,” including “unfavorable financial conditions, rising debt, and sluggish domestic growth,” poses a direct threat to the development paths of low-income countries. The report emphasizes that as trade tensions intensify between major global powers, nations in the Global South are suffering the consequences of an economic conflict they did not initiate. The recent imposition of US tariffs, followed by retaliatory measures from China, has severely disrupted global supply chains, leading to delays, increased logistics costs, and a freeze on investment for many developing countries, impacting manufacturers from Lagos to Jakarta who are now revising plans and slowing down hiring.
In this precarious environment, UNCTAD warns of a “real threat” of reversing decades of hard-won development progress. The agency stresses the danger of commercial and financial isolation for the most vulnerable economies.
However, the report identifies a silver lining in the growing momentum of South-South trade. Now accounting for nearly one-third of global trade, it demonstrates encouraging dynamism driven by deeper regional integration. “The potential of South-South economic integration offers opportunities for many developing countries,” the report underscores.
UNCTAD calls for a coordinated global response to prevent the further fragmentation of international trade. “Coordinated action will be essential to restore confidence and keep development on track,” the agency concluded, emphasizing the urgent need to safeguard the progress achieved by the economies of the South.
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