The world economy is on a recessionary trajectory, driven by escalating trade tensions and persistent uncertainty, according to the UN Trade and Development (UNCTAD) in its new report, "Trade and Development Foresights 2025 - Under Pressure: Uncertainty Reshapes Global Economic Prospects."

Global growth is projected to slow to 2.3% in 2025, placing the world economy on a recessionary path, the report says.

It cites mounting threats, including trade policy shocks, financial volatility, and a surge in uncertainty, that risk derailing the global outlook.

UNCTAD said rising trade tensions are impacting global trade and that recent tariff measures are disrupting supply chains and undermining predictability.

"Trade policy uncertainty is at a historical high," the report notes, "and this is already translating into delayed investment decisions and reduced hiring."

The UN organisation that promotes the interests of developing countries in world trade noted that the slowdown will affect all nations, but UNCTAD remains particularly concerned about developing countries, especially the most vulnerable economies.

It noted that many low-income countries face a "perfect storm" of worsening external financial conditions, unsustainable debt and weakening domestic growth.

UNCTAD underlines the real threat to economic growth, investment, and development progress, particularly for the most vulnerable economies.

Meanwhile, UNCTAD points to the growth of trade among developing countries, known as South-South trade, as a source of resilience.

Already accounting for about one-third of global trade, the potential of South-South economic integration offers opportunities for many developing countries, the report said.

UNCTAD urges dialogue and negotiation, alongside stronger regional and global policy coordination, building on existing trade and economic ties.

"Coordinated action will be essential to restore confidence and keep development on track," the report said.

UNCTAD initially projected that global economic growth could slow to 2.7% for both 2024 and 2025, reflecting stagnation and a potential recession.

The International Monetary Fund (IMF) said the world economy is expected to grow at a stable but relatively slow pace in 2024, with growth of 3.2% in both 2024 and 2025.