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.
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.
Heightened uncertainty is pushing up bond yields, reflected in a rising "term premium" - extra compensation investors demand for holding long-term debt. This is raising financing costs for governments, households and firms, putting further upward pressure on global interest rates and complicating prospects for developing economies.
The slowdown will affect all economies, but UNCTAD highlights particular risks for developing countries. Many low-income economies face a "perfect storm' of tighter financial conditions, high external debt and weakening domestic growth. More than half of low-income countries - 35 out of 68 - are now in debt distress or at high risk, according to the International Monetary Fund.
Persistently high bond yields in advanced economies, alongside tighter US monetary policy, are expected to crowd out financial flows to developing countries. Investor caution is redirecting capital toward assets and markets perceived as "safer', further straining financing for the Global South.
Despite the headwinds, opportunities exist. Trade among developing countries - also known as South-South trade - is expanding faster than other trade flows and now accounts for about one third of global trade.
In East and South-East Asia, intraregional trade has been a major force behind economic growth, with the region contributing over 40% of global growth in 2024.
UNCTAD's report calls for stronger regional integration, renewed multilateral cooperation and a rebalancing of fiscal priorities toward sustainable infrastructure, social protection and climate action. Coordinated action, it says, will be essential to restore confidence and keep development on track.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Etihad
2 days ago
- Al Etihad
US FDA approves Moderna's next-generation COVID vaccine for adults 65 or older
31 May 2025 09:47 (REUTERS)The US Food and Drug Administration (FDA) has approved Moderna's next-generation COVID-19 vaccine for everyone aged 65 and above, the company said on Saturday, the first endorsement since the regulator tightened vaccine has also been approved for people aged 12 to 64 with at least one or more underlying risk factors, Moderna said in a said it expects to have the vaccine, called mNEXSPIKE, available for the 2025-2026 respiratory virus season."The FDA approval of our third product, mNEXSPIKE, adds an important new tool to help protect people at high risk of severe disease from COVID-19," CEO Stephane Bancel said in the Department of Health and Human Services, under the leadership of long-time vaccine skeptic Robert F. Kennedy Jr., is increasing regulatory scrutiny on FDA said on May 20 it planned to require drugmakers to test their COVID booster shots against an inert placebo in healthy adults under 65 for approval, effectively limiting them to older adults and those at risk of developing severe Moderna vaccine, branded mNEXSPIKE, can be stored in refrigerators rather than freezers, to offer longer shelf life and make distribution easier, especially in developing countries where supply-chain issues could hamper vaccination Centers for Disease Control and Prevention (CDC), which Kennedy also oversees, said on Thursday that COVID vaccines remain an option for healthy children when parents and doctors agree that it is needed, stopping short of Kennedy's announcement days earlier that the agency would remove the shots from its immunisation CDC announcement eases investor concern to some extent, analysts say, as it keeps the existing framework for older adults and at-risk people who generally seek out the is betting on its newer messenger RNA vaccines as it grapples with waning demand for its original COVID vaccine Spikevax and lower-than-expected uptake of its respiratory syncytial virus approval for mNEXSPIKE was based on late-stage trial data, which showed the shot was not inferior in efficacy compared to Spikevax in individuals aged 12 years and older. The shot also showed superior efficacy compared to Spikevax in adults 18 years of age and older in the study.
Gulf Today
3 days ago
- Gulf Today
Elon Musk leaves Trump administration after turbulent effort to slash government
Billionaire Tesla CEO Elon Musk is leaving the Trump administration after leading a tumultuous efficiency drive, during which he upended several federal agencies but ultimately failed to deliver the generational savings he had sought. His "off-boarding will begin tonight," a White House official told Reuters late on Wednesday, confirming Musk's departure from government. Musk earlier on Wednesday took to his social media platform X to thank President Donald Trump as his time as a special government employee with the Department of Government Efficiency draws to an end. "As my scheduled time as a Special Government Employee comes to an end, I would like to thank President Donald Trump for the opportunity to reduce wasteful spending," he wrote on his social media platform X. "The DOGE mission will only strengthen over time as it becomes a way of life throughout the government," he added. Elon Musk gestures as President Donald Trump addresses a joint session of Congress at the Capitol in Washington. File / AP His departure was quick and unceremonious. He did not have a formal conversation with Trump before announcing his exit, according to a source with knowledge of the matter, who added that his departure was decided "at a senior staff level." While the precise circumstances of his exit were not immediately clear, he leaves a day after criticising Trump's marquee tax bill, calling it too expensive and a measure that would undermine his work with the US DOGE Service. Some senior White House officials, including Deputy Chief of Staff Stephen Miller, were particularly irked by those comments, and the White House was forced to call Republican senators to reiterate Trump's support for the package, a source familiar with the matter said. While Musk remains close to the president, his exit comes after a gradual, but steady slide in standing. Elon Musk stands and is recognised and applauded as President Donald Trump addresses a joint session of Congress. File/ AP After Trump's inauguration, the billionaire quickly emerged as a powerful force in Trump's orbit: hyper-visible, unapologetically brash and unfettered by traditional norms. At the Conservative Political Action Conference in February, he brandished a red metallic chainsaw to wild cheers. "This is the chainsaw for bureaucracy," he declared. On the campaign trail, Musk had said DOGE would be able to cut at least $2 trillion in federal spending. DOGE currently estimates its efforts have saved $175 billion so far, a number Reuters was not able to independently verify. Musk did not hide his animus for the federal workforce, and he predicted that revoking "the COVID-era privilege" of telework would trigger "a wave of voluntary terminations that we welcome." But some cabinet members who initially embraced Musk's outsider energy grew wary of his tactics, sources said. Elon Musk listens as President Donald Trump speaks during a cabinet meeting at the White House. AP/ File Over time, they grew more confident pushing back against his job cuts, encouraged by Trump's reminder in early March that staffing decisions rested with department secretaries, not with Musk. Musk clashed with three of Trump's most senior cabinet members - Secretary of State Marco Rubio, Transportation Secretary Sean Duffy and Treasury Secretary Scott Bessent. He called Trump's trade adviser Peter Navarro a "moron" and "dumber than a sack of bricks." Navarro dismissed the insults, saying, "I've been called worse." At the same time, Musk began to hint that his time in government would come to a close, while expressing frustration at times that he could not more aggressively cut spending. Elon Musk jumps on stage as he joins Donald Trump during a campaign rally at site of his first assassination attempt in Butler, Pennsylvania. File / AFP In an April 22 Tesla conference call, he signaled he would be significantly scaling back his government work to focus on his businesses. "The federal bureaucracy situation is much worse than I realized," Musk told The Washington Post this week. "I thought there were problems, but it sure is an uphill battle trying to improve things in D.C., to say the least." DOGE GOES ON Musk's 130-day mandate as a special government employee in the Trump administration was set to expire around May 30. The administration has said DOGE's efforts to restructure and shrink the federal government will continue. Several cabinet secretaries are already discussing with the White House how to proceed without further alienating Congressional Republicans. But even as department heads will keep some DOGE infrastructure in place, they will likely move to reassert control over budgets and staffing, sources have told Reuters. "The DOGE mission will only strengthen over time as it becomes a way of life throughout the government," Musk said. Trump and DOGE have managed to cut nearly 12%, or 260,000, of the 2.3 million-strong federal civilian workforce largely through threats of firings, buyouts and early retirement offers, a Reuters review of agency departures found. At the same time, DOGE has hit a number of roadblocks, with federal courts at times propping back up agencies shortly after DOGE had moved to eliminate them. In some cases, staff and funding cuts have led to purchasing bottlenecks, increased costs and a brain drain of scientific and technological talent. The most recent source of friction came on Tuesday when Musk criticized the price tag of Republicans' tax and budget legislation making its way through Congress. "I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing," Musk told CBS News. One source said the billionaire's decision to trash Trump's bill on television deeply upset senior White House aides. His political activities have drawn protests and some investors have called for him to leave his work as Trump's adviser and more closely manage Tesla, which has seen falls in sales and its stock price. Associated Press
Zawya
3 days ago
- Zawya
Ethiopia, IMF staff agree programme review that could unlock $260mln
Ethiopia and the International Monetary Fund have reached a staff-level agreement on the third review of the country's $3.4 billion loan programme from the lender, the Fund said on Friday. Once approved by the IMF's Executive Board, Ethiopia will gain access to another $260 million in financing. "The (Ethiopian) authorities' policy actions in the first year of the programme have yielded strong results. The transition to a flexible exchange rate regime has proceeded with little disruption," the IMF statement said. "Macroeconomic indicators have performed better than expected, with substantially better outcomes than forecast for inflation, goods exports and international reserves." (Reporting by Alexander Winning; Editing by Hugh Lawson)
