The Trade and Development Foresights 2025 report reveals a grim scenario for global markets, which are still reeling from recent shocks. Heightened financial conditions, geopolitical fragmentation, and a complex policy landscape contribute to a challenging outlook, especially for developing economies that are especially sensitive to external disruptions.
The report highlights the pervasive uncertainty affecting international markets, stemming from unpredictable inflation, geopolitical tensions disrupting trade routes, and fears of an economic slowdown. This uncertainty complicates long-term business planning, leading many firms to hesitate in committing capital due to unclear future demands, input costs, and regulatory changes.
International trade flows reflect these pressures, showing a moderation in growth momentum as they recover from pandemic-related disruptions. While global merchandise trade volumes have improved slightly, UNCTAD points out that this recovery is losing steam due to declining global demand and the effects of fragmented trade policies.
The report also identifies increasing protectionist trade policies that alter competitive dynamics. The shift toward regionalization or “friend-shoring” of supply chains may enhance resilience for some businesses but threatens overall efficiency and raises costs.
Similarly, the trade in services, though somewhat resilient, is affected by the prevailing economic slowdown. Commodity markets are under increased pressure, influenced by geopolitical shifts, supply-side constraints, and the ongoing energy transition.
Financial markets are similarly reflecting economic uncertainty, characterized by heightened volatility and rising borrowing costs resulting from the end of ultra-low interest rates. Developing nations particularly face acute risks due to tightening financial conditions, exacerbating long-term challenges related to debt sustainability.
In such an interconnected environment, slowing trade impacts commodity demand, while volatile prices disrupt inflation and investment. UNCTAD emphasizes the importance of coordinated policy actions, cautioning against unilateral approaches that could worsen the global slowdown.
The outlook for international markets in 2025 is fraught with uncertainty, with ongoing risks for vulnerable economies looming large.