Wednesday 7 May 2025 10:40 GMT

Concerns Over Recession Intensify Amid Trump's Tariffs, Global Trade Instability


(MENAFN) Since taking office, U.S. President Donald Trump's tariffs have heightened worries about a potential recession this year, prompting international organizations to lower their growth forecasts for the global economy.

Growth projections have significantly dropped as China retaliates against Trump's tariffs, which were first introduced on April 2, affecting over 180 nations.

The UN Conference on Trade and Development (UNCTAD) anticipates that global growth will decelerate to 2.3% this year, falling below the 2.5% mark typically associated with a global recession. This forecast indicates a notable decline compared to the economic growth rates observed before the pandemic.

In January, the UNCTAD Economic Policy Uncertainty Index soared to 460.2, marking the highest level recorded this century.

The World Trade Organization (WTO) has also revised its global growth forecast downward by 0.6% to 2.2%, attributing this adjustment to tariffs and increasing policy uncertainties. The WTO predicts a 0.2% contraction in global goods trade this year, with North America expected to experience the most significant decline in exports.

This anticipated contraction of 0.2% is expected to occur as pressure subsides following Trump's temporary 90-day tariff pause. However, if tariffs are reinstated, the contraction in global trade could escalate to as much as 1.5% this year.

Looking ahead, the WTO projects that the global economy will grow by 2.4% in 2026.

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