UN predicts slower global growth amid tariff tensions

Container cranes sit idle at the port of the port of New York & New Jersey in Bayonne, N.J., Monday, May 12, 2025.

The United Nations has projected slower global economic growth for this year and the next, citing the impact of rising U.S. tariffs and escalating trade tensions. Additional concerns include geopolitical instability, increasing production costs, supply chain disruptions, and financial market volatility.

“There’s so much uncertainty in the air,” said Shantanu Mukherjee, director of the Economic Analysis and Policy Division at the UN Department of Economic and Social Affairs. Launching the midyear forecast, he remarked, “We had anticipated two years of stable, though modest, growth — but recent developments have dimmed those prospects.”

The global economy is now expected to grow by 2.4% in 2025 and 2.5% in 2026 — each revised downward by 0.4 percentage points from earlier projections. In comparison, global GDP grew by 2.9% last year.

Mukherjee noted that the slowdown is widespread but has hit the poorest and least developed countries the hardest. Growth forecasts for these regions have dropped from 4.6% to 4.1% since January, resulting in significant losses for countries already burdened by extreme poverty.

Advanced and emerging economies alike are facing reduced growth. The United States is forecast to see a decline from 2.8% growth in 2024 to 1.6% in 2025, due to high tariffs and policy uncertainty dampening investment and consumer activity.

China’s economy is also expected to cool, with growth falling from 5% in 2024 to 4.6%, driven by weak consumer sentiment, manufacturing disruptions, and challenges in the real estate sector.

In the European Union, growth remains stagnant at just 1%, with higher trade barriers and weak exports. The United Kingdom is also set to slow, from 1.1% last year to 0.9% this year.

Major developing economies like Brazil, Mexico, and South Africa are projected to experience further economic strain due to weaker trade, declining investments, and falling commodity prices.

India remains one of the fastest-growing large economies, though its growth rate is expected to drop from 7.1% in 2024 to 6.3% this year.

While the overall outlook is cautious, there is some optimism. Mukherjee said ongoing bilateral negotiations could ease tariff pressures, though a full return to pre-tariff conditions is unlikely. Nonetheless, reducing uncertainty could encourage investment and stimulate economic momentum globally.