UN trade arm economic warning

The United Nations’s leading organ, which focuses on trade and development, warns that UNCTAD is negative due to changes in global trade policy, including tariff uncertainty in 2025.

According to the United Nations Trade and Development Conference, although it is a modest growth in global investments at the beginning of the year, trade tensions have led to downward revisions in the foreign direct investment indicator (DYY). World Investment Report 2025It was released on Thursday. This includes gross domestic product, capital formation, export of goods and services, foreign exchange, financial market volatility and investor feeling.

Richard Bolwijn, one of the authors of the report and the President of the Investment Research Research Branch Department of the report, said, “Bringing all of these together, almost all of them have been revised in the direction of almost higher risk, lower growth, lower investment, etc.,” Richard Bolwijn said. He said. “If we take projections by the IMF, the World Bank and other institutions that provide us with raw data for these indicators, they all worsened since January. Moderate growth expectations that we may have at the beginning of the year have disappeared.” He said.

The feedbacks in growth include a two -year positive tendency in production investments, which were fed by the producers who started to diversify supply chains beyond China, which began during their pandemi.

“Companies continued to look for new places for production, but now they all sit in their hands with tariffs.” He said. The first quarter of this year shows that both the merger and purchasing market and the Greenfield announcements (new project structures) are low records. “Basically, the merger and purchasing market has returned to global financial crisis levels,” he said.

Bolwijn said it would be difficult to get rid of the shock of the first six months of the year, even if the situation is recovered and the tariffs are provided.

Globally, he said that the projects were at risk of value between $ 100 and 200 billion. “All of these will not disappear over one night, but the projects will be postponed, which will lead to permanent progress.” He said.

“Tariffs, tariffs, manufacturing sectors aiming to restructure the supply chains, while led to some investment project announcements, the main impact was a dramatic increase in investor uncertainty.” “Early data, agreements and projects are operating low for the first quarter of 2025.”

In the report, cross -border merger and purchases remained below the long -term average and add a structural change to domestic and coastal investment strategies in the midst of regulatory examination and global uncertainty, “he added.

The report showed that foreign direct investment is a second year contract in a row. The international project finance, which constitutes the highest share of the DYY in the least developed countries, continued its decrease in 2024. Infrastructure investment constitutes a large part of this investment. According to the report, the value of the IPF was 26 percent lower in 2024 and increased a sharp decline from 2023.

The uncertainty on stock market and interest rates was the reason for the fact that it was indicated behind the impact in financing conditions, and the least developed countries needed these funds the most. UNCTAD warned that these countries will be the most affected by the current investment decline.

In general, the DLY was stable in 2024, $ 867 billion in 2024, but the expansion between the winners and the losers was wide.

Africa’s direct investment of foreign direct investment recorded the highest level and increased by 75% to $ 97 billion. The share of the lion from this investment came from a single international project financial agreement in Egypt by a sovereign investment fund in the United Arab Emirates. By eliminating this investment, the FLY flows to Africa still increased by 12% ($ 64 billion).

However, foreign direct investment in China continued to collapse.

“In the last 15 years, we have already reported that there has always been a gradual increase in foreign direct investments. [China] However, in the last two years, we have seen a decrease in the next two years. 29% fell last year, Bol Bolwijn said.

Bolwijn said he did not see that companies withdrew from China in terms of production capacity, but that tariffs affected investment decisions. “In other words, where international companies want to expand or create new production facilities, they have to think that there is now a tariff and that they will look at the most advantageous places from the trading cost perspective.”

It declined 18% of the DYY in South America. India saw a humble 2% decrease. Latin America and the Caribbean largely decreased by 12%due to low energy prices in 2024. Brazil, the largest DYY buyer in the region, decreased by 8%.

“Withdrawal in DYM affects the relative opportunity to enter or expand all developing countries and global value chains and the manufacturing sectors,” Bolwijn said. He said. “India rely on foreign direct investments to expand its production, training and production capacity.”

Structurally weak and vulnerable economies have seen a marginal increase in DYY. The least developed countries have increased by 9% (37 billion dollars) or saw 2.4% of global DYM flows. While developing countries have decreased by 10%, small islands have seen an 11% increase.

UNCTAD wrote that the “most worrying” deterioration in DYY is in sectors that are compatible with sustainable development goals. While investment in energy and gas supply decreased by 28%, project financing to renewable energy decreased by 16%.

“This tendency comes at a time in which the world may be at least inadequate. Reverse this negative tendency in target investments will demand that investment flows are deeper with long-term sustainability targets, not only more capital-physician as well as public.”

Bowlijn said there was a major growth in semiconductor projects, including the US and India. Foreign direct investment in digital infrastructure is also increasing. “Digital economy investment is the world’s fastest growing segment, including developing countries.” He said. “This also includes data centers that see great growth.”

However, even though the digital investment is the fastest growing segment in the DLY, these investments are light. “Therefore, it can bring us less value in terms of payment balance for DYY, but it can bring us more projects and good development opportunities for developing countries.” He said.