South Asia To Grow 6.5% In 2025, As Global Growth Slumps To 2.3%: UN Trade Agency

South Asia will grow by 5.6 per cent in 2025 “as declining inflation opens the way for monetary loosening across most of the region,” a new UN report said, even though it projects global economic growth to slow down to 2.3 per cent amid recessionary trend linked to escalating trade tensions and uncertainty

UNITED NATIONS, (APP - UrduPoint / Pakistan Point News - 16th Apr, 2025) South Asia will grow by 5.6 per cent in 2025 “as declining inflation opens the way for monetary loosening across most of the region,” a new UN report said, even though it projects global economic growth to slow down to 2.3 per cent amid recessionary trend linked to escalating trade tensions and uncertainty.

"Developing economies face risks and worsening external conditions, but growing South-South trade and greater regional economic integration are opportunities," the UN trade and development body, UNCTAD, said in a new report published on Wednesday.

In South Asian region, it said food price volatility will remain a risk and complexities around debt will continue to affect economies such as Pakistan, Bangladesh and Sri Lanka.

However, India is projected to grow by 6.5 per cent, slightly lower than the 6.9 per cent growth of 2024, but still maintaining its status as the fastest-growing major economy, UCTAD said.

Globally, the projection is below the 2.5 per cent threshold widely viewed by economists as signaling a global recession.

It also represents a significant deceleration compared to average annual growth rates prior to the COVID-19 pandemic when global growth was already subdued.

The report cited mounting threats including trade policy shocks, financial volatility and a surge in uncertainty.

Rising trade tensions are impacting global trade, and recent tariff measures are disrupting supply chains and undermining predictability.

“Trade policy uncertainty is at a historical high,” it said, “and this is already translating into delayed investment decisions and reduced hiring.”

The slowdown will affect all nations and UNCTAD expressed continued concern for developing countries, particularly the most vulnerable economies.

Many low-income countries face a “perfect storm” of worsening external financial conditions, unsustainable debt and weakening domestic growth, the report said.

In terms of regional developments, UNCTAD expects a sharp deceleration of the United States economy to 1 per cent growth in 2025, largely due to heightened policy uncertainty compounded by recently announced trade measures. Canada is also on track to experience a significant deceleration, with growth forecast to 0.7 per cent.

“Overall, the risk of a recession materializing later this year in the Northern America region has increased considerably,” the report said.

Meanwhile, growth in Africa is expected to pick up to 3.6 per cent this year, though its three largest economies – South Africa, Nigeria and Egypt, who together account for nearly half of the region’s economic output – show a mixed picture of recovery and challenges.

“Africa is on the frontline of exposure to cascading crises. Subdued growth across the continent is insufficient to create enough good jobs, especially for its youth,” the report said.

The outlook is not all gloomy as the report points to the growth of trade among developing countries – known as South-South trade – as a source of resilience.

It currently accounts for roughly one third of global trade and offers opportunities for many developing countries.

In the face of rising trade tensions and a slowdown in growth, UNCTAD calls for dialogue and negotiation alongside stronger regional and global policy coordination.

“Coordinated action will be essential to restore confidence and keep development on track,” the report said.