UN forecasts global economic growth slowdown due to Trump's tariffs

The United Nations recently announced forecasts indicating a decline in global economic growth for 2025 and 2026, predicting a drop from 2.9% last year to 2.4% this year and 2.5% next year. This reduction in growth is attributed to a surge in U.S. tariffs and mounting trade tensions, which have created considerable uncertainty in the global economy. Shantanu Mukherjee, director of the Economic Analysis and Policy Division at the U.N. Department of Economic and Social Affairs, emphasized the adverse impacts of rising production costs, geopolitical instability, and supply chain disruptions. The economic outlook is particularly grim for impoverished nations, where growth prospects have diminished from 4.6% to 4.1%. This represents a significant financial setback for these countries, which account for over half of the global population living in extreme poverty. The report highlights how developed and developing nations alike are projected to experience economic strains from the turbulent trade environment and policy uncertainty. For the United States, economic growth is forecasted to decline sharply from 2.8% last year to just 1.6% this year. This slowdown is expected to be exacerbated by higher tariffs and uncertain government policies that discourage private investment and consumer spending. In contrast, China's economic growth is anticipated to slow from 5% down to 4.6% amid continuing challenges in the property sector, weak consumer sentiment, and disruptions in its manufacturing exports. In the European Union, particularly among the eurozone nations, growth forecasts have also been downgraded. The EU's growth rate is expected to stagnate at 1%, with factors such as reduced net exports and escalating trade barriers playing a significant role. Germany’s economy faces zero growth due to its reliance on exports and rising energy costs. Economists are cautiously optimistic, suggesting that negotiations may eventually lead to lower tariffs, but full economic recovery depends on resolving these critical uncertainties.