Mounting trade disputes and policy uncertainty are casting a shadow over the global economy, with international bodies revising growth forecasts downward as tensions reshape trade patterns.
Trade Forecasts Deteriorate
The World Trade Organization (WTO) projects global merchandise trade volume to contract by 0.2% in 2025 under current tariff conditions – a sharp 3 percentage point downgrade from previous estimates. Its report warns that U.S. "reciprocal tariffs" and prolonged uncertainty could worsen declines to 1.5%. WTO Director-General Ngozi Okonjo-Iweala cautioned that such policies risk derailing growth, disproportionately harming vulnerable economies.
Regional Impacts Diverge
Projections reveal stark contrasts: North America faces a potential 12.6% export collapse, while Asia shows modest 1.6% trade growth. Europe is expected to see 1% export gains. Analysts note that Asia's relative resilience stems from diversified supply chains and expanding intra-regional partnerships.
Business Confidence Wanes
The UN Trade and Development agency (UNCTAD) warns policy uncertainty has reached historic highs, slowing hiring and delaying investment decisions. Its 2025 forecast predicts global growth cooling to 2.3%, citing trade friction as a key driver. However, South-South trade – accounting for a third of global commerce – emerges as a stabilizing force, fueled in part by China's evolving economic partnerships.
Both organizations emphasize multilateral cooperation to avoid protracted downturns, with UNCTAD urging targeted exemptions for least-developed nations from escalating tariffs.
