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Uncertainty around global trade policy, particularly US President Donald Trump’s frequent and shifting tariff impositions, is pushing the global economy towards a recession, UN researchers warn.

A report by UN Trade & Development (UNCTAD) says that in April, “concerns over the global economic context and the impact of trade policy shifts have translated into major financial turbulence”.

Global economic growth is now projected to reach 2.3% this year, below the common 2.5% threshold needed to avoid global recession, the report says.

Growth rates across the Americas are particularly low, with the two continents only expected to grow by 1.2% this year, down from 2.6% in 2024.

The trade policy uncertainty index, a measure of media coverage given to the topic, is at historic highs and currently stands at more than double the levels reached during the Covid-19 pandemic.

Global goods trade is also affected, with UNCTAD’s estimates for growth continually revised downwards throughout the first quarter of 2025.

The Shanghai Containerized Freight Index, a key indicator of confidence in global trade volumes, was also down 40% between early January and late March.

Stock markets suffered major blows after Trump’s ‘Liberation Day’ tariff announcement in early April, and the three major US indexes remain around 2% lower than they were prior to Trump’s second term.

Despite the loosening of monetary policy by central banks, especially in the West, long-term interest rates have continued to rise, which UNCTAD ascribes to geopolitical uncertainty.

In the US, the bond premium – the amount by which long-term bond yield exceeds the short-term – is rising, suggesting pessimism around the country’s prospects.

Economies’ room to manoeuvre is further constrained by what UNCTAD calls an “austerity course prevailing in G7 countries”, with the portion of GDP made up of government revenue and expenditure expected to fall in 2024-25 compared to 2021-23.

UNCTAD says rising defence spending’s outcome on global prosperity will depend on whether it is financed by cutting expenditure from programmes aligned with sustainable development goals, such as renewable energy and aid, or from public debt and progressive taxation.

Rising interest rates are also hurting developing economies, which the report says are being forced to divert resources from “critical spending needs to cover the onerous debt-servicing costs” they face.

High bond yields in major western countries are keeping investment locked up in markets that are considered safer than those in the developing world, hindering development opportunities, the report adds.

Developed nations are also cutting aid and development spending around the world. The OECD’s Development Assistance Committee is facing cuts of up to 18% in its donations, which come from 33 of the largest aid-providing nations.

However, the relative importance of the US in determining global growth and opportunities for trade is reducing as China’s rise continues, meaning developing countries may not be as affected by uncertainty stemming from Trump’s measures as they would have been in previous years.

The share of developing countries whose main export partner is China increased by 6.2% between 2012 and 2023, edging slightly ahead of the US. The change is even more pronounced in the imports, with around 30% of developing countries now counting China as their main merchandise trade partner compared to only 21% for the US.

South-south trade is growing faster than other trade flows, and is now larger than South-North and North-South exports, which UNCTAD say offers opportunities for many developing countries.