The global economy has demonstrated resilience in the face of recent tariff shocks, according to a report released on March 14, 2024, by the UN Department of Economic and Social Affairs. Despite challenges, economic activity remained steady, driven by front-loaded shipments, inventory buildup, and robust consumer spending. This stability has been supported by monetary easing and stable labour markets.
The report highlights that while macroeconomic policies continue to provide support, growth in trade and overall economic activity is expected to moderate in the near future. Economic growth in the United States is projected to slow to 1.9 percent in 2025, down from 2.8 percent in 2024. Growth is anticipated to edge up slightly to 2.0 percent in 2026 and 2.2 percent in 2027, bolstered by expansionary fiscal and monetary measures. Inflation is expected to remain above the 2 percent target in 2026 but should gradually decrease as the effects of tariffs diminish and housing costs stabilize.
In China, economic growth is projected at 4.9 percent in 2025 but is expected to decrease slightly to 4.6 percent in 2026 and 4.5 percent in 2027. A temporary easing of trade tensions with the United States, including targeted tariff reductions and a one-year trade truce, has helped bolster confidence. Continued policy support is likely to sustain domestic demand, according to the report.
Growth in the European Union is forecasted at 1.5 percent for 2025, rising to 1.3 percent in 2026 and 1.6 percent in 2027. This growth is primarily driven by resilient consumer spending, although higher US tariffs and ongoing geopolitical uncertainties are expected to negatively impact exports.
In South Asia, growth is anticipated to moderate to 5.6 percent in 2026, down from 5.9 percent in 2025, before returning to 5.9 percent in 2027. Specifically in India, growth is estimated at 7.4 percent for 2025, with forecasts of 6.6 percent for 2026 and 6.7 percent for 2027. This strong performance is expected to be supported by resilient consumption and significant public investment, which should largely offset the adverse impacts of increased tariffs from the United States.
As economies adapt to the evolving landscape shaped by tariffs and geopolitical dynamics, the emphasis on consumer confidence and government policy remains critical in maintaining growth momentum across regions. The upcoming years will likely reveal the lasting effects of these developments on the global economic landscape.
