UNCTAD Warns Of Policy Risks As Trade In Nigeria, Others Grow By $300bn

Global trade expanded by an estimated $300bn in the first half of 2025, driven by rising services trade and marginal increases in goods prices, according to the latest Global Trade Update released by the United Nations Conference on Trade and Development (UNCTAD) and seen by THE WHISTLER.

However, the organization warns that the outlook for the remaining year is increasingly uncertain due to mounting policy risks and escalating geopolitical tensions.

UNCTAD estimates that global trade rose by 1.5 per cent in the first quarter of 2025 and is projected to grow by approximately two per cent in the second quarter. Services trade was the key growth driver, rising by nine per cent year-on-year over the last four quarters, outpacing the more modest gains in goods trade.

The rise in trade value was largely attributed to price increases, as trade volumes grew by only one per cent during the first quarter.

Despite the expansion, UNCTAD highlighted growing vulnerabilities in the global trade environment. “While headline numbers reflect modest growth, the undercurrents suggest fragility,” the report noted, pointing to uneven performance across regions and the widening of trade imbalances.

Developed economies took the lead in global trade growth during the first quarter, reversing recent trends that had favored the Global South.

About 14 per cent surge in United States imports and a six per cent increase in European Union exports drove the rebound.

In contrast, developing countries saw a two per cent decline in imports, and South-South trade remained largely stagnant. Africa was a notable exception, with a five per cent rise in exports and a 16 per cent year-on-year increase in intraregional trade.

Trade imbalances continued to widen over the past four quarters. The United States posted a significantly larger trade deficit, while China and the European Union reported growing surpluses.

Bilateral trade gaps between the U.S. and its major partners expanded, with the U.S. running annual trade deficits of $360bn with China, $276bn for the EU, and $116bn for Vietnam.

“Such imbalances are not only economic in nature but increasingly geopolitical,” UNCTAD warned, noting that the expanding deficits could fuel protectionist sentiment and intensify policy interventions in international trade.

UNCTAD expressed concern that the second half of 2025 could bring heightened disruptions. Among the key risks identified are new U.S. tariffs — including a 10 per cent baseline rate and additional levies on steel and aluminum — which raise the specter of a new wave of trade fragmentation.

Though retaliatory measures have so far been limited, the report cautioned that “further unilateral actions could lead to tit-for-tat responses, destabilizing supply chains and adversely affecting third-party economies.”

The report also highlighted the growing trend of domestic subsidies and inward-looking industrial policies, especially in strategic and high-tech sectors. These measures, while aimed at strengthening domestic capabilities, could disrupt complex global production networks and undermine long-term trade stability.

Despite the risks, UNCTAD identified signs of resilience in the global trade system. Freight indices have rebounded from early-2025 lows, regional trade integration is deepening, and services trade continues to perform strongly.

However, the report concludes that continued recovery in the second half of the year will depend on “policy clarity, geoeconomic developments and supply chain adaptability.”