Summary

The United Nations Conference on Trade and Development (UNCTAD) released a new working paper on global economic developments. According to the organization, global growth is expected to slow from 2.9% in 2024 to 2.6% in 2025 and to remain at that level in 2026. Despite ongoing challenges, developing economies remain the main drivers of global growth, accounting for nearly 70% of the increase in global output. Economic momentum is constrained by declining investment (with the exception of certain technology sectors), rising costs of external financing and growing debt burdens, as well as volatility in global financial markets. Additional pressure stems from geopolitical risks and the fragmentation of global trade. The authors place particular emphasis on the interlinkages between climate change and financial and trade markets. According to UNCTAD, high vulnerability to climate-related disasters directly reduces economic growth: countries affected by extreme events incur substantial losses (G20 countries lost USD 525 billion between 2000 and 2019). In addition, climate-vulnerable countries pay more than USD 20 billion per year in higher borrowing costs. UNCTAD calls for increasing international climate finance and simplifying related mechanisms to support sustainable growth and resilience.