Released from Geneva, the nearly 200-page UNCTAD report warns that geopolitical tensions, including tariff hikes under the Trump administration, continue to deter investment flows beyond tech sectors. UNCTAD Secretary-General Rebeca Grynspan stated that while the global economy showed resilience in 2024 and 2025, that momentum is fragile and unsustainable unless uncertainty is reduced.

Developing economies are especially exposed to currency volatility and restrictive trade policies, making them vulnerable despite recovering export demand from China and Southeast Asia.

The agency's projections are 0.4 percentage points below pre-pandemic averages, suggesting that global economic recovery remains partial and uneven.

South-South divide, dollar dominance persist

A key concern highlighted in the report is the widening gap between developed and developing nations, despite the latter accounting for over 40% of global GDP, 50% of foreign direct investment, and 45% of global trade. The report also notes that while 72% of global trade still operates under WTO's Most-Favored-Nation rules, the financial networks supporting 90% of trade are increasingly centralized and privately governed, raising systemic risk.

The UN warns of "regulatory arbitrage" and stresses that this fragility was evident in April 2025 when markets collapsed following Trump's tariff escalation, only to rebound when those measures were moderated - particularly toward China.

Dollar declines but no successor in sight

Though the U.S. dollar's share of global foreign reserves is declining, no alternative currency has yet emerged to replace it. "Despite its notable decline, the dollar remains more trusted by central banks than any other currency," the report concludes.

This dollar dominance underscores both a reliance on U.S. monetary policy and a risk of fragmentation in the global trade system should alternatives fail to materialize.