Global Economy at a Breaking Point: UN Warns of Rising Trade Tensions and Economic Instability
The global economy is standing on a knife’s edge, and according to the United Nations, the slightest push could trigger a cascade of consequences especially for the world’s most vulnerable nations.
In a sharply worded report released Thursday, the UN Department of Economic and Social Affairs (UN DESA) warned that escalating trade tensions, rising tariff pressures, and increasing policy uncertainty are placing the global economic system in a dangerously fragile state.
Despite optimistic headlines in some regions, the ground reality tells a more troubling story.
Inflation Down on Paper, But Not in the Market
Although global headline inflation reportedly eased between 2023 and 2024, the UN says inflation has already exceeded pre-pandemic levels in nearly two-thirds of countries worldwide. Over 20 developing nations are now battling double-digit inflation, a figure that speaks volumes about the widening economic divide.
Nowhere is this more evident than in Africa, South Asia, and Western Asia, where food inflation continues to soar above 6%, disproportionately affecting low-income households who already struggle with basic survival.
So, while central banks and policymakers boast about controlling inflation, the average citizen in Lagos, Karachi, or Nairobi sees no relief. Prices remain high, food remains scarce, and the pain of poverty deepens.
Tariffs, Trade Wars, and the Return of Economic Nationalism
The UN DESA report paints a grim picture of tariff-driven price shocks that are now threatening to unravel global supply chains. These protectionist policies, often justified under the guise of “economic sovereignty,” are doing more harm than good delaying investments, inflating production costs, and choking trade-dependent economies.
“The tariff shock risks hitting vulnerable developing countries hard,” warned Li Junhua, UN Under-Secretary-General for Economic and Social Affairs. For countries already grappling with debt, insecurity, and inflation, a blow to trade could be catastrophic.
From Washington to Wuhan: No One Is Safe
Even developed economies are not immune. The United States is projected to see significant slowing in growth, with private investment and consumer spending taking a hit due to rising tariffs and uncertainty.
China, the world’s second-largest economy, isn’t faring much better. Growth is now expected at 4.6% in 2025, a downgrade from 5.0% in 2024. The reasons? A toxic mix of fading consumer confidence, sluggish exports, and a fragile property sector.
Brazil and Mexico, two of Latin America’s largest economies, are also facing downward revisions in growth forecasts clear indicators of how far-reaching and interconnected this crisis has become.
Limited Fiscal Space, Unlimited Consequences
Perhaps most alarming is the reality that many developing nations lack the fiscal space to respond effectively. With shrinking revenues, growing debt, and limited access to credit, governments are struggling to shield their citizens from the worst impacts.
The UN warns that this could jeopardize long-term efforts to create jobs, reduce poverty, and address inequality, setting many countries back by decades.
What’s Next?
The world is entering a phase where economic instability is no longer a future risk it’s a present reality. Without global cooperation, policy coherence, and pro-poor economic strategies, the coming years could see increased inequality, political unrest, and social collapse in fragile states.
As major economies prioritize self-preservation, the question now is: Who will speak for the smaller nations left behind?
Reference
Global Economy at a Breaking Point: UN Warns of Rising Trade Tensions and Economic Instability