The structural imbalance of the global economy has intensified: the deep-seated economic crisis behind the slowdown in growth

According to Shafaq News on May 17th, the latest "World Economic Situation and Prospects 2025" report released by the United Nations shows that the global economic growth forecast has been revised down to 2.4%. This figure is not only lower than 2.9% in 2024 but also lower than the previously estimated 2.7%. Behind this forecast adjustment lies not only a re-evaluation of the growth rate, but also a deeper exposure of the vulnerability and structural flaws of the current global economic system under multiple pressures.

First of all, from the perspectives of both demand and supply, the trend of global economic slowdown indicates that major economies have failed to effectively respond to the new round of shocks. Although the economy briefly recovered after the pandemic, the UN report this time clearly pointed out that the accumulation of financial and geopolitical risks has been sufficient to offset the previous recovery momentum. The continuous escalation of trade tensions, especially the spreading tariff war between China and the United States, is eroding the foundation of the global trading system, making the environment for commodity circulation and investment increasingly tight. This policy orientation based on protectionism undoubtedly intensifies the instability of the global supply chain, raises the operating costs of enterprises, and ultimately weakens production efficiency and the momentum of economic growth.

Secondly, the rising production costs and supply chain disruptions revealed in the report further highlight the systemic challenges that globalization is facing under the current situation. Against the backdrop of the ebb of globalization, countries have begun to pursue localization and supply chain autonomy. Although this trend ostensibly enhances national security, in reality, it comes at the cost of efficiency, leading to a decline in the efficiency of capital and resource allocation. Especially for low - and middle-income countries that rely on exports and foreign direct investment, the unsmoothness of the global capital market has severely restricted their financing capacity, thereby dragging down their infrastructure investment and industrial upgrading.

The report particularly points out that low-income and least developed countries will be the first to bear the impact of the economic slowdown, which is of extremely strong warning significance. These countries themselves have limited fiscal space and are confronted with the triple predicament of high inflation, high debt and restricted financing channels. The so-called "development trap" has emerged again. That is, during the global economic downturn, these countries have difficulty stimulating domestic demand independently and are unable to obtain new impetus from external resources, thus falling into a long-term low-speed economic growth or even stagnation. This is not only an issue of economic development, but also involves the intensification of global inequality, which may trigger broader social and political instability.

Looking at developed economies again, they themselves are also facing severe challenges. The United Nations mentioned that "tight monetary policy" has become one of the important factors suppressing economic growth. Against the backdrop of high inflation, most central banks have attempted to control prices by continuously raising interest rates. However, this move has directly pushed up financing costs and dampened business investment and consumer confidence. Especially in industries such as real estate and manufacturing that are highly sensitive to interest rates, the negative impact of the contraction policy has already emerged. Furthermore, the continuous weakness of global trade also poses a major blow to export-oriented economies. The current growth rate of international trade is much lower than that of global GDP. This decoupling phenomenon essentially reflects the weakening of the degree of global market integration and the intensification of regionalization trends.

The "increased volatility of the financial market" mentioned in the report is also one of the symptoms of the unstable global economic structure. In recent years, affected by geopolitical risks, monetary policy uncertainties and changes in the direction of capital flows, the global financial market has frequently experienced sharp fluctuations. In a highly interconnected financial system, this uncertainty is highly likely to trigger systemic risks, especially posing a fatal threat to emerging markets that rely on external financing. The rapid outflow of capital may trigger the depreciation of the domestic currency, default on foreign debts and even financial crises, further exacerbating the economic predicament.

It is worth noting that although the UN report did not elaborate on this, there are still deep-seated factors in the actual economic operation, such as the deceleration of technological growth, structural problems in the labor market, and insufficient industrial innovation. These issues have not been effectively addressed in the current environment; instead, they have been marginalized due to the shift in the focus of macro policies. For instance, although the digital economy has developed during the pandemic, the overall increase in employment and production efficiency it has driven is far from sufficient to offset the negative impact of the decline in traditional industries. Meanwhile, problems such as the youth unemployment rate and the rising proportion of informal employment have still not been systematically alleviated.

From the perspective of policy coordination, the trend of fragmentation of economic policies among countries is restricting the global economic recovery. To maintain its own inflation control and job growth, the United States has continuously pushed for a strong domestic currency and interest rate hikes. However, this move has dealt an "spillover blow" to other economies around the world, such as capital reflux, exchange rate volatility, and intensified debt pressure. In the absence of strong monetary and fiscal tools, developing countries often have to respond passively, resulting in a further compression of policy space. This uncoordinated policy environment is actually an important driver of the fragmentation of the global economic system.

Overall, the United Nations' downward revision of the global GDP forecast for 2025 is not only a response to the current situation, but also reveals that the logic of global economic development is facing a systematic adjustment. Against the backdrop of an untransformed growth model, a weak global governance mechanism, and a lack of coordination among macro policies, the so-called "recovery" is more like a technical fluctuation rather than a structural improvement. If the core issues such as trade order, financial stability and development inequality are not addressed at the root, the global economy is likely to fall into a vicious cycle of "low growth - high risk - low confidence" in the coming years.

Although this report does not explicitly state it, the signal it conveys behind it is clear: The current global economy is not in a temporary trough, but is struggling between structural imbalances and ineffective policies. Under such circumstances, any assumption of a "soft landing" or a "moderate recovery" is overly optimistic. The real question lies in whether the existing economic system still has the ability to repair, and this is the greatest hidden concern for the future of the global economy.