UNCTAD Report Warns of Global Trade Vulnerabilities in 2025

On December 2, 2025, the United Nations Conference on Trade and Development (UNCTAD) released its annual "Trade and Development Report 2025," titled "On the Brink: Trade, Finance and the Reshaping of the Global Economy." The report highlights that over 90% of global trade now relies on bank financing, particularly U.S. dollar liquidity and cross-border payment systems, making international trade highly susceptible to financial market fluctuations.

UNCTAD warns that this deep financial integration poses significant risks, especially for developing countries, which face higher financing costs, volatile capital flows, and climate-related challenges. The agency calls for comprehensive reforms to the global financial system, including modernizing trade regulations, reforming the international monetary system, and expanding capital markets to improve long-term financing access. UNCTAD emphasizes the need for integrated policies that connect trade, finance, and sustainability to build genuine resilience and support global development.

The release of this report comes amid escalating trade tensions and economic uncertainties. Earlier in 2025, UNCTAD projected a slowdown in global economic growth to 2.3%, attributing this deceleration to rising trade tensions, increased policy uncertainty, and recession risks. Notably, U.S. President Donald Trump's imposition of sweeping tariffs, including a 145% duty on Chinese goods, has intensified market fears and investor anxiety.

Furthermore, the global shipping industry has experienced significant volatility due to geopolitical tensions and a surge in trade tariffs. UNCTAD downgraded its 2025 maritime trade growth forecast to just 0.5% annually, citing disruptions to global supply chains from trade policy changes and ongoing conflicts.

The deepening financialization of trade has profound societal implications. For developing countries, the increased cost of financing and exposure to volatile capital flows can lead to reduced public spending on essential services such as healthcare, education, and infrastructure. This, in turn, can exacerbate poverty and inequality, hindering progress toward the Sustainable Development Goals.

Moreover, the volatility in global trade and finance can lead to job losses, particularly in export-dependent industries. Small and medium-sized enterprises (SMEs) in developing countries, which often lack the financial buffers of larger corporations, are especially vulnerable to these disruptions.

The current situation bears similarities to previous periods of economic uncertainty, such as the global financial crisis of 2008. During that time, the interconnectedness of global financial markets led to widespread economic downturns. However, the current scenario is distinguished by the added complexity of geopolitical tensions and the rapid pace of technological change affecting trade patterns.

UNCTAD's "Trade and Development Report 2025" serves as a critical call to action for policymakers worldwide. It highlights the urgent need for comprehensive reforms to address the vulnerabilities introduced by the financialization of trade, with a particular focus on supporting developing countries in building economic resilience.