“On the brink: Trade, finance and the reshaping of the global economy”

The world economy in 2025 stands at a critical juncture. A century after the Great Depression, rising tariffs, geopolitical tensions, and financial volatility are once again threatening global stability.

Key messages:

1. Global growth remains weak and below pre-pandemic trends, with fragile momentum and high uncertainty.
2. World trade saw a temporary boost in early 2025 from pre-tariff front-loading and AI-related demand, but underlying growth is only 2.5–3%. As new tariffs bite and front-loading fades, trade is expected to slow sharply into 2026, hitting low-income countries and small firms hardest.
3. Over 90% of global trade depends on global finance. The “global financial cycle” (driven by US monetary policy, the dollar, and risk appetite) creates powerful swings that directly affect trade volumes and industrial production.
4. The Global South now accounts for >50% of world trade and one-third of global GDP (up dramatically since 1995), yet remains financially dependent on Northern (dollar-based) institutions → higher borrowing costs, currency volatility, and debt risks.
5. 2025 is a turning point: trade and finance are more intertwined than ever, demanding new thinking on global governance.

UNCTAD’s four urgent policy recommendations:

1. Boost fiscal revenues & domestic resource mobilization
2. Deepen regional integration & diversify productive structures
3. Strengthen macro-financial resilience and avoid financial fragmentation
4. Rebuild inclusive multilateralism to sustain growth, reduce asymmetries, and tackle climate challenges

The coming months will reveal whether the world can reshape trade and finance to serve people, planet, and shared prosperity, or slide further toward fragmentation.