UN Report Warns: Financial Volatility Dominates Trade, Global Economic Growth Expected to Slow

The United Nations Conference on Trade and Development (UNCTAD), in its Trade and Development Report 2025 released on December 2, 2025, warned that volatility in financial markets is increasingly dictating the trajectory of global trade and posing significant risks to development prospects worldwide. The report projects global economic growth to slow to 2.6% in 2025, down from 2.9% in 2024. It highlights that over 90% of global trade relies on bank financing, deeply intertwining trade activity with the global financial and monetary environment.

Consequently, interest rate changes in major financial centers or shifts in investor sentiment can directly impact global trade volumes. The report specifically notes that pricing in commodity markets, particularly for food, increasingly reflects financial strategies rather than actual supply and demand. This deep dependency places developing economies under heightened pressure from increased financing costs, susceptibility to sudden capital flow reversals, and climate-related financial risks, constraining the fiscal and investment space needed to sustain their growth.