The United Nations, in its World Economic Situation and Prospects (WESP) briefing released in early June 2025, downgraded its forecast for global economic growth to 2.4% for 2025. This represents a slowdown from the 2.9% growth recorded in 2024 and is 0.4 percentage points lower than the projection made in January 2025. The report primarily attributes this downward revision to heightened trade tensions and intensified policy uncertainty, explicitly noting that the effective tariff rate of the United States had risen to approximately 14% by mid-May 2025, up from 2.5% in early 2025, even accounting for a temporary U.S.-China agreement to ease recent tariff hikes.
These factors are expected to strain global supply chains, increase production costs, lead to delays in critical investment decisions, and fuel financial market volatility. The UN's analysis indicates that the economic outlook has particularly worsened for countries heavily reliant on manufacturing, especially those with strong trade ties to the United. This revision underscores the tangible macroeconomic consequences of protectionist policies and highlights how the unpredictability of such measures can act as a significant drag on global economic activity, affecting investment and growth far beyond the primary countries involved in trade disputes.
Source: United Nations