Business

EBRD Lowers 2025 Growth Forecast Amid Trade Uncertainty and Slowing Investment

Published

1 year ago

February 27, 2025

RTX

The European Bank for Reconstruction and Development (EBRD) has lowered its 2025 growth forecast for its economies to 3.2%, a 0.3 percentage point decrease from its September 2024 projection. The revision comes amid weaker external demand, slowing investment, and rising trade uncertainties, with the Bank warning that US trade tariffs could further impact growth.

Global Headwinds Affecting Growth

In its latest report released on Thursday, the EBRD cited geopolitical tensions, trade disruptions, and inflationary pressures as key challenges for economies within its regions, which span Central and Eastern Europe, the Caucasus, Central Asia, and the Southern and Eastern Mediterranean.

Despite inflation easing from its 2022 peak, fiscal imbalances and trade-related uncertainties are contributing to a cautious economic outlook. The Bank highlighted that weaker-than-expected recoveries in Central Europe, the Baltic states, and Southeastern European countries have negatively impacted manufacturing, exports, and investment.

Regional Growth Revisions

The EBRD’s forecast has been revised downward for most of its economies:

Central Europe and the Baltic states: Growth now projected at 2.7%, down 0.5 percentage points, due to weak industrial activity and slower export recovery.
Southeastern EU economies: Expected growth of 2.1%, a sharp 0.6-point downgrade, as investment remains subdued.
Western Balkans: Minor downward revision to 3.6%, down 0.1 points.
Central Asia: Still the fastest-growing region at 5.7%, though down 0.2 points, with Kazakhstan and Uzbekistan experiencing slower activity. Kyrgyzstan and Tajikistan are leading with 7% growth.
Eastern Europe and the Caucasus: Growth outlook cut by 0.5 points to 3.6%, as the post-pandemic trade boom fades.
Southern and Eastern Mediterranean: Weighed down by geopolitical instability and sluggish reforms, now projected at 3.7%, down 0.2 points.
Turkey: No change to its 3.0% growth projection for 2025, but recovery to 3.5% is expected in 2026 as inflation eases and real wages rise.

Trade Tariffs Could Reshape Investment Flows

Trade uncertainty remains a significant risk. The EBRD estimates that a 10 percentage point increase in US tariffs on all imports could shave 0.1% to 0.2% off GDP in EBRD regions.

Countries with strong trade ties to the US—such as Jordan, Slovakia, Hungary, and Lithuania—could experience economic strain, while Georgia, Albania, Egypt, and Bulgaria would be vulnerable to higher tariffs on steel and aluminum.

However, some economies could benefit from trade shifts. Countries like Uzbekistan, Vietnam, Mexico, the UAE, and Saudi Arabia are expected to attract rising foreign investment as companies look to bypass tariff barriers and restructure supply chains.

Inflation and Fiscal Challenges Persist

While inflation in EBRD regions has fallen to 5.9% as of December 2024, it remains above pre-pandemic levels. Chief Economist Beata Javorcik warned that despite easing price pressures, shifting inflation drivers and delays in global interest rate cuts are complicating economic recovery.

Additionally, fiscal challenges are growing. Government deficits remain high, and military spending has doubled over the past decade, rising from 1.8% of GDP in 2014 to 3.5% in 2023. Further increases are expected, placing additional strain on public finances.

“Fiscal policy and wage dynamics now play a much greater role, and the path ahead requires careful policy calibration to ensure a stable growth trajectory,” Javorcik said.

As global uncertainties continue, the EBRD advises governments to focus on structural reforms, investment stability, and strategic fiscal planning to maintain economic momentum in 2025.

Business

FII Summit in Rome Calls for Faster Reforms to Boost Europe’s Investment Appeal

Published

9 minutes ago

June 19, 2026

Web Reporter

The discussions highlighted what participants described as a critical opportunity for Europe to reinforce its strategic autonomy and position itself as a leading destination for global investment. However, speakers warned that without faster reforms and reduced administrative barriers, the region risks falling behind the United States and rapidly advancing Asian economies.

Unlike the recent G7 discussions, which focused heavily on geopolitical tensions and security issues, the Rome summit placed economic transformation at the centre of attention. The FII Priority Europe event brought together policymakers and investors to examine how the continent can regain momentum and secure funding for industrial and technological development.

Richard Attias, chairman of the executive committee of the FII Institute, told delegates that Europe retains strong fundamentals, including skilled labour, innovation capacity and established industrial infrastructure. However, he said investors increasingly demand predictability, speed and clarity in decision-making processes.

Attias called for streamlined regulations and simplified administrative systems to improve capital flows into key sectors such as artificial intelligence, digital infrastructure, renewable energy and advanced manufacturing. He also noted that Europe is competing not only with the United States but also with emerging economies that are rapidly adjusting their regulatory frameworks to attract investment.

He stressed that the challenge lies in maintaining European standards while ensuring that regulatory systems do not slow economic progress. According to him, global capital is moving quickly, and Europe must adapt if it wants to remain a leading investment destination.

The issue of long-term investment in Europe was also addressed by Yasir O. Al Rumayyan, governor of Saudi Arabia’s Public Investment Fund and chairman of energy giant Aramco. He said Europe stands at a defining moment in shaping its role in the evolving global economy and emphasized the importance of creating conditions that support large-scale, long-term investment.

Al Rumayyan pointed to opportunities in areas such as energy transition projects, technological innovation and strategic infrastructure development. His remarks carried significant weight, given that the Public Investment Fund manages assets worth about $1.15 trillion, while Aramco remains one of the world’s most profitable energy companies.

Organisers said the choice of Rome as the summit venue reflected Europe’s potential to combine historical influence with forward-looking reform ambitions. The message repeated throughout the event was that while Europe continues to attract strong investor interest, its ability to convert that interest into sustained economic growth will depend on how quickly it modernizes its regulatory environment and accelerates structural reforms.

Business

Oil Prices Slide as US–Iran Accord Eases Supply Fears While Markets React to Fed Policy Shift

Published

19 hours ago

June 18, 2026

Web Reporter

Global crude prices extended losses on Thursday after the United States and Iran signed a memorandum of understanding aimed at ending their conflict and reopening the Strait of Hormuz, a key route for global energy shipments. Equity markets also responded unevenly as investors digested the Federal Reserve’s latest policy signals.

Oil benchmarks dropped in early trading following confirmation that US President Donald Trump and Iranian President Masoud Pezeshkian had signed an initial agreement designed to halt hostilities and restore normal maritime flows through the Strait of Hormuz. The waterway handles a significant share of global crude exports, and expectations of its reopening immediately weighed on prices.

At the time of writing, West Texas Intermediate fell 2.3% to around $75 a barrel, while Brent crude slipped about 2% to $78 a barrel. Although both benchmarks remain above pre-conflict levels near $70, they have retreated sharply from recent highs above $100 recorded during the height of the tensions.

The agreement sets a 60-day period for negotiations on a final settlement addressing Iran’s nuclear programme. In the interim, Tehran has agreed to reduce its stockpile of highly enriched uranium. The deal also includes provisions for easing sanctions, allowing Iran to resume oil exports and enabling tanker traffic to move more freely through the Persian Gulf.

US officials have indicated that the Strait of Hormuz could be fully reopened by Friday without transit fees, a development that has reinforced expectations of increased global supply. President Trump, commenting after the signing, said “oil down, stocks up,” reflecting market reactions to the accord.

Despite the easing outlook, the International Energy Agency has warned that global oil markets remain fragile. Strategic reserves in advanced economies have fallen to their lowest levels since 1990, with OECD stockpiles declining by more than 160 million barrels since the conflict began. The agency also revised down its demand forecast, citing weaker consumption and elevated fuel prices.

Flows through the Strait of Hormuz had already begun recovering before the agreement, reaching roughly 12 million barrels per day in early June after a period of disruption.

Financial markets, meanwhile, delivered a mixed performance following the Federal Reserve’s latest projections. Wall Street fell on Wednesday, with the S&P 500 down 1.2%, the Dow Jones off 1%, and the Nasdaq losing 1.3%, after policymakers signalled the possibility of interest rate increases later this year.

In his first press conference as Fed chair, Kevin Warsh avoided committing to a clear policy path, signalling a shift in how the central bank communicates future decisions. US President Donald Trump, attending the G7 summit in France, described the situation as “whatever,” while acknowledging uncertainty over potential rate hikes.

Early trading on Thursday pointed to a rebound, with US futures higher and Asian equities advancing on optimism over easing geopolitical risks. European markets opened more cautiously, reflecting lingering uncertainty despite the improving energy outlook.

Business

Kevin Warsh Begins Fed Tenure as Markets Watch for Clues on Future Rate Path

Published

2 days ago

June 17, 2026

Web Reporter

The US Federal Reserve enters a new phase on Wednesday as Kevin Warsh presides over his first policy meeting as chair, marking a closely watched leadership transition in American monetary policy. While economists broadly expect interest rates to remain unchanged, investors are focused on signals that could define the central bank’s direction under new leadership.

The Federal Open Market Committee is expected to keep the benchmark interest rate within the 3.50% to 3.75% range, extending a steady policy stance for a fourth consecutive meeting. The last adjustment came in December 2025, when rates were reduced by 25 basis points.

Although no immediate policy shift is anticipated, attention is centred on the language of the Fed’s statement and Chair Warsh’s first press conference. Analysts say even subtle changes in wording could indicate whether policymakers are leaning toward holding rates higher for longer or considering future increases if inflation remains persistent.

Warsh assumes leadership during a more complex economic environment than when he was previously associated with calls for lower interest rates. At that time, he aligned with arguments suggesting artificial intelligence-driven productivity gains could help ease inflation pressures. However, economists now point to continued inflationary risks tied to investment cycles in technology sectors, which have contributed to demand pressures across the economy.

Inflation has risen since the outbreak of the Iran conflict in February, reaching 4.2%, its highest level in three years, largely driven by higher energy costs. Although a US-backed framework for a peace deal has been announced, uncertainty remains over its durability, and analysts warn that any relief in fuel prices could take months to filter through to broader inflation measures.

The Fed’s preferred inflation gauge has remained above its 2% target for more than five years. At the same time, the labour market continues to show resilience, with 172,000 jobs added in May, marking the third consecutive month of solid employment growth. This stability has reduced pressure for further rate cuts that were previously projected earlier in the year.

Because interest rates are expected to remain unchanged, market attention has shifted to the Fed’s updated Summary of Economic Projections and the “dot plot”, which outlines policymakers’ expectations for future rate movements. Some economists, including those at Bank of America, anticipate that the projections may indicate no rate cuts through 2026, with a minority of officials even signalling potential rate increases.

Communication strategy is also expected to be a key focus under Warsh. He has previously argued that the Fed should reduce the frequency of public commentary to avoid constraining policy flexibility. One possible change could involve returning to fewer press conferences, a model last used under former Chair Ben Bernanke.

However, analysts caution that reduced communication could unsettle financial markets that have grown reliant on clear forward guidance from the central bank.

Adding to the complexity, former chair Jerome Powell remains on the Fed’s board as a governor and is expected to participate in Wednesday’s vote, maintaining influence over policy decisions during the transition period.