Global cooperation and balanced policies are critical to preventing economic fragmentation and safeguarding long-term growth amid growing trade uncertainty, the UN Conference on Trade and Development (UNCTAD) has said.
While China’s stimulus measures and lower inflation in some regions are likely to support trade, protectionism and shifting policies in major economies remain key risks, UNCTAD said in its latest update on global trade covering data through early March.
The challenge in 2025 will be to prevent global fragmentation – where nations form isolated trade blocs – while managing policy shifts without undermining long-term growth. Actions taken now by governments and businesses will shape trade resilience for years to come, it said, seeking to caution how protectionism and shifting trade strategies could disrupt global trade.
Coming even as tariff wars look set to intensify in the face of proposed reciprocal tariffs by the U.S., the report said world trade saw record expansion to $33 trillion in 2024. The 3.7% rise compared with 2023 was driven by developing economies and strong services trade. Looking ahead, however, new risks loom, including trade imbalances, evolving policies and geopolitical tensions.
Governments expanding tariffs, subsidies and industrial policies are reshaping trade flows. The U.S., European Union and others are increasingly tying trade measures to economic security and climate goals, while China is using stimulus policies to maintain export momentum. Such policy realignment is contributing to uncertainty. Rising protectionism or policies that favour domestic industries through tariffs or restrictions, particularly in advanced economies, is triggering retaliatory measures from trading partners and adding trade barriers.
Shipping trends indicate a slowdown, with falling freight indices signalling weaker industrial activity, particularly in supply chain-dependent sectors, UNCTAD said.
Published – March 14, 2025 09:26 pm IST
