Services trade remains resilient even as the global economy and trade weaken amid higher tariffs and trade policy uncertainty, according to the United Nations (UN) flagship report.
The World Economic Situation and Prospects: June 2025 Briefing said services trade is buoyed by the rapid expansion of digitally deliverable services, which now account for 14 percent of global exports.
“Sectors such as education, finance, and healthcare have benefited from the widespread adoption of artificial intelligence,” it said.
The UN report said global growth is projected to decelerate from 2.9 percent in 2024 to 2.4 percent in 2025, reflecting a 0.4 percentage point downgrade since January.
“This downward revision primarily reflects heightened trade tensions and intensified policy uncertainty, which are expected to strain global supply chains, raise production costs, and delay critical investment decisions, besides fuelling financial market volatility,” it said.
The report said weakening of trade flows is also taking a toll on investment.
“Heightened uncertainty, elevated costs, and the potential reconfiguration of supply chains are expected to prompt businesses to delay or reduce capital expenditures, particularly in trade-dependent sectors like electronics, machinery, and automotive manufacturing,” it added.
According to UN Department of Economic and Social Affairs (DESA) estimates, the effective tariff rate of the United States stood at about 14 percent in mid-May, up from 2.5 percent in early 2025, after factoring in the temporary agreement between the United States and China to significantly ease recent tariff hikes for 90 days.
“While 2025 growth forecasts have been broadly downgraded, the outlook has deteriorated most for countries reliant on manufacturing, particularly those with strong trade ties to the United States,” it said.
Further, the UN report said the weakening global economy is jeopardizing progress on the Sustainable Development Goals.
“Slower growth and declining merchandise trade are hindering poverty reduction, increasing inequalities, and limiting resources for sustainable development initiatives,” it added.
