The United Nations Department of Economic and Social Affairs on Wednesday released a midyear update to its World Economic Situation and Prospects report, saying global growth has been downgraded and that heightened trade-policy uncertainty and higher tariff levels are weighing on investment, inflation and development prospects.

"We are forecasting global economic growth at 2.4% for 2025 and 2.5% for 2026," said Shantanu Mukherjee, director of the Economic Analysis and Policy Division at the UN Department of Economic and Social Affairs. He told reporters the figure represents a downward revision of 0.4 percentage points for each year from the department's January projection.

The revision matters because slower growth is concentrated among vulnerable countries, Mukherjee said. "Among the most severely hit are the least developed countries, whose growth prospects for 2025 have fallen from 4.6 to 4.1," he said, adding that the change translates into "a loss of billions in economic output for the most disadvantaged countries." The report notes these countries face falling official development assistance, limited fiscal space and high debt levels.

Ingo Pitele, senior economist in DESA's Global Economic Monitoring branch, described the update as "sobering." "Economic growth is slowing, uncertainty is high, and risk to development are mounting," he said, citing the effects of higher U.S. tariffs and policy unpredictability on firms' ability to plan and invest.

The briefing highlighted three cross-cutting risks:
- Trade-policy uncertainty and tariffs. Mukherjee and Pitele said the U.S. effective tariff rate stands at about 14% on the department's calculation, roughly six times the level at the start of the year. DESA reported trade-policy uncertainty has surged to its highest level in a decade. The department projects global trade growth to slow sharply to 1.6% in 2025.
- Public-finance pressures. DESA said fiscal deficits are widening in many countries and that interest payments are consuming a rising share of government revenue in developing countries, reducing room for fiscal support to growth and development.
- Slower investment and elevated inflation in some regions. The update forecasts weaker investment growth and noted that food inflation remains a critical issue in developing regions, where the number of countries experiencing annual food inflation above 20% rose from six to 18 between 2018 and 2024.

Regionally, the report projects varied outcomes: the U.S. growth projection was lowered to 1.6% for 2025, the European Union is forecast at about 1% growth, Japan at about 0.7%, China at 4.6%, and India at roughly 6.3%. DESA said East Asian economies with strong trade ties to the United States are especially exposed to tariff-driven disruptions to supply chains. Least developed countries' average growth was projected at 4.1% for 2025, well below the pre-pandemic pace.

Speakers emphasized uncertainty about how recently announced bilateral agreements — including a temporary U.S.-China understanding reached the prior weekend — will affect tariffs going forward. "This deal has not really resolved the problem of uncertainty," Mukherjee said, while noting negotiations are a "positive sign" that can put a floor under the worst outcomes.

On policy responses, DESA urged renewed attention to a global framework for financing development and pointed to the upcoming fourth International Conference on Financing for Development in Seville as a key forum for those discussions.

The midyear update and full dataset are posted online on DESA's publications site, the presenters said.