Global Economy Enters an Era of “Fragile Resilience”: UNCTAD Warns Growth to Slow to 2.6% in 2025

The latest report released by the United Nations Conference on Trade and Development (UNCTAD) reveals an economic reality that cannot be ignored: global economic growth is projected to slow to 2.6% in 2025. This figure is not only lower than the 2.9% growth in 2024 but also signals that the global economy is entering a new phase fraught with challenges. The state of “fragile resilience” described in the report aptly summarizes the complex situation facing the global economy—seemingly robust yet inherently vulnerable, where even minor external shocks could trigger chain reactions and pose threats to global economic stability.

From the demand side, weak global demand is the direct cause of the economic slowdown. After years of consumption-driven growth, global consumer confidence indices continue to decline, and growth in consumer spending remains sluggish. Behind this phenomenon lie both structural factors such as slowing income growth and increased uncertainty in the job market, as well as the combined effects of cyclical factors like high inflation and high interest rates. As the final link in economic activity, the contraction in consumer demand directly leads to reduced willingness among enterprises to produce and a decrease in investment activities, forming a negative feedback loop that further dampens the momentum for economic growth.

Insufficient momentum in private investment is another major factor contributing to the economic slowdown. Against the backdrop of increasing global economic uncertainty, corporate expectations for future markets have turned pessimistic, leading to more cautious investment decisions. The high-interest-rate environment has exacerbated this trend by raising corporate financing costs and reducing investment returns, further weakening businesses' willingness to invest. The contraction in private investment not only affects current economic growth but also constrains future improvements in production capacity and technological innovation, thereby undermining the economy's long-term growth potential.

The suppressive effect of high interest rates appears particularly pronounced against the broader backdrop of global economic deceleration. In response to inflationary pressures, many central banks have implemented interest rate hikes, attempting to curb rising prices through tightening monetary policy. However, while this policy has been effective in controlling inflation, it has also significantly dampened economic growth. High interest rates not only increase borrowing costs for businesses and individuals, suppressing consumption and investment activities but may also lead to declining asset prices, potentially triggering turbulence in financial markets. More critically, the high-interest-rate environment could exacerbate the global debt crisis. For countries already burdened with heavy debt, interest rate hikes will undoubtedly increase their debt-servicing pressures and may even raise the risk of debt defaults.

The intertwining of trade financialization and geopolitical risks further casts a shadow over global economic growth. Trade financialization has made international trade activities more dependent on financial markets, and fluctuations in financial markets often carry high uncertainty and contagion risks. Once turbulence occurs in financial markets, international trade activities will be directly impacted, affecting global economic stability. At the same time, rising geopolitical risks have heightened global economic uncertainty. Frequent occurrences of trade wars, sanctions, and conflicts not only disrupt the stability of global industrial and supply chains but may also lead to increased trade barriers and higher trade costs, further suppressing global trade and investment activities.

Faced with this series of challenges, the global economy stands at a critical turning point. How to break the vicious cycle of weak demand, insufficient investment, high-interest-rate suppression, and the intertwined risks of trade financialization and geopolitics has become a crucial issue for global policymakers. Relying solely on monetary policy adjustments is no longer sufficient. Instead, a combination of fiscal, industrial, and trade policies must be deployed to form a synergistic approach to address the challenges of slowing economic growth. At the same time, strengthening international cooperation to maintain the stability of global industrial and supply chains and promoting the liberalization and facilitation of trade and investment are also vital pathways to alleviating the current economic difficulties.

The warning bell of global economic growth slowing to 2.6% has already sounded. This is both a profound revelation of the current state of the global economy and a stern warning about future economic trends. In the face of these challenges, countries worldwide must move forward hand in hand, adopting a more open, inclusive, and cooperative attitude to jointly address the various risks and challenges posed by the economic slowdown and promote sustainable and healthy development of the global economy.