Business

ECB Warns of Rising Trade Barriers and Policy Uncertainty Impacting Eurozone Growth

Published

1 week ago

February 13, 2025

RTX

The European Central Bank (ECB) has raised concerns over rising trade frictions, regulatory barriers, and global demand slowdown, warning that these factors could weigh on eurozone growth. In its latest Economic Bulletin, released on Thursday, the ECB also highlighted uncertainty over U.S. trade policy as a key risk to economic stability.

Trade Risks and U.S. Policy Shifts

The ECB reported that global trade momentum weakened at the end of 2024, with growth moderating from 1.5% in previous quarters to 0.7% in the final quarter of the year and early 2025. While strong U.S. imports temporarily supported European exports, the ECB noted that policy uncertainty under the new U.S. administration might be prompting companies to frontload imports in anticipation of potential tariffs or trade restrictions.

“Greater friction in global trade could weigh on euro area growth by dampening exports and weakening the global economy,” the ECB stated.

The bulletin pointed to weak manufacturing export orders in December 2024, signaling continued fragility in the sector. While early 2025 may still benefit from businesses rushing orders ahead of possible trade restrictions, the ECB warned that new tariffs and policy shifts could create headwinds later in the year.

Eurozone Growth Struggles Amid Weak Business Confidence

Despite sustained export activity, the eurozone economy remains sluggish, with GDP growth of just 0.1% in the fourth quarter of 2024. The services sector provided some support, but industrial production and business investment remained weak.

Business and consumer confidence levels have also declined, raising concerns about slower-than-expected recovery. The ECB noted that geopolitical risks, high borrowing costs, and trade uncertainty could delay stronger economic momentum.

“Lower confidence could prevent consumption and investment from recovering as fast as expected,” the ECB warned.

Inflation Easing, But No Commitment to Rate Cuts

Inflation in the euro area has moderated but remains above the ECB’s 2% target. In January 2025, headline inflation stood at 2.8%, while core inflation—which excludes energy and food—was at 2.9%. The ECB pointed to strong wage growth as a major contributor to persistent services inflation, indicating that underlying price pressures have not fully subsided.

Despite progress, the Governing Council reaffirmed its data-dependent approach, stating that there is no pre-commitment to rate cuts. Decisions on monetary policy will continue to be made on a meeting-by-meeting basis, guided by economic data.

Long-Term Competitiveness Challenges

Beyond immediate risks, the ECB bulletin emphasized structural challenges affecting Europe’s economic competitiveness. The report cited findings from former ECB President Mario Draghi and ex-Italian Prime Minister Enrico Letta, who both called for urgent reforms to improve the region’s economic resilience.

The ECB pointed out that European firms face greater regulatory burdens and financial constraints compared to their U.S. counterparts. The International Monetary Fund (IMF) estimates that overall trade costs within Europe are equivalent to an ad valorem tariff of 44% for manufacturing, compared to just 15% in the U.S.

The bulletin endorsed the European Commission’s Competitiveness Compass, urging policymakers to take concrete steps to boost investment, streamline regulations, and enhance the Single Market. It also highlighted that Europe’s young, high-growth firms are scaling up slower than in the U.S., due in part to fragmented financial and regulatory frameworks.

Outlook

As the eurozone navigates trade tensions, economic uncertainty, and inflation concerns, the ECB’s latest bulletin reinforces the need for vigilance in policymaking. With monetary easing still uncertain and global trade dynamics shifting, Europe’s ability to adapt will be crucial in maintaining economic stability and growth in 2025.

Business

World’s Largest EV Manufacturer Recalls Over 375,000 Vehicles for Power Steering Issue

Published

2 days ago

February 21, 2025

RTX

The world’s largest electric vehicle manufacturer is recalling more than 375,000 vehicles due to a power steering issue that could impact driver control, according to the US National Highway Traffic Safety Administration (NHTSA).

The recall affects certain 2023 Model 3 and Model Y vehicles, with the NHTSA reporting that the printed circuit board responsible for electronic power steering assist may become overstressed. This could result in a loss of power steering assistance when the vehicle stops and then accelerates again.

A loss of power steering assistance requires drivers to exert greater effort to steer the vehicle, particularly at low speeds, increasing the risk of accidents.

The EV manufacturer has not disclosed the number of incidents linked to the issue but stated that it is working to address the problem promptly. Owners of affected vehicles will be notified and offered free repairs, including replacement of the faulty circuit board if necessary.

The NHTSA advises vehicle owners to monitor their dashboard warning lights and seek service immediately if they notice any changes in steering performance. The agency is continuing to monitor the situation to ensure compliance and safety.

This recall comes as the electric vehicle industry faces heightened scrutiny over software and hardware reliability. Despite the setback, industry analysts believe the company’s proactive recall could help maintain customer trust and highlight its commitment to safety and product quality.

Business

Alibaba Reports Fastest Revenue Growth in Over a Year Amid AI Boom

Published

2 days ago

February 21, 2025

RTX

Chinese e-commerce giant Alibaba Group Holding has reported its fastest revenue growth in more than a year, driven by advancements in artificial intelligence and cloud computing. The company’s revenue for the quarter ending in December rose 8% to 280.2 billion yuan (€36.65 billion) compared to the previous year, surpassing analysts’ expectations. Net income surged to 48.9 billion yuan (€6.41 billion), boosting its New York-traded stock by over 12% following the earnings announcement.

Alibaba CEO Eddie Wu highlighted the company’s commitment to AI, stating during an earnings call that Alibaba plans to “aggressively invest” in AI and cloud infrastructure over the next three years, with planned spending expected to exceed its total investments of the past decade. Wu emphasized that artificial general intelligence (AGI), which aims to match or surpass human intelligence, is Alibaba’s primary focus, describing the opportunity as a “once-in-several-decades” transformation for the industry.

The company has already integrated AI into its cloud products, resulting in a 13% revenue growth for its cloud division—the fastest pace in two years. Alibaba’s international commerce unit, including platforms like AliExpress and Lazada, saw a 32% increase in revenue, driven by robust cross-border business performance.

Alibaba’s AI strategy comes amid growing competition between the U.S. and China in the AI sector. In January, Alibaba introduced its latest Qwen AI models, which performed well in industry benchmark tests, positioning the company among China’s leading AI innovators. Additionally, Alibaba is collaborating with Apple to integrate its AI technology into Chinese iPhones.

The company’s resurgence follows a challenging period marked by regulatory crackdowns in China’s technology sector. In 2020, authorities halted the IPO of Alibaba’s financial affiliate, Ant Group, and imposed a record $2.8 billion (€2.67 billion) fine for anti-monopoly violations. However, recent signs suggest a more supportive stance from Beijing. Chinese President Xi Jinping recently met with prominent entrepreneurs, including Alibaba cofounder Jack Ma, signaling renewed government backing for the tech industry.

Amid these developments, Alibaba’s stock has surged by over 60% this year, with U.S.-listed shares rising 8.5% to $136.58 (€130.41) during morning trading. With its focus on AI and cloud computing, Alibaba is well-positioned to capitalize on the growing demand for advanced technology in China and beyond.

Business

Airbus Reports Strong Orders and Steady Growth Despite Supply Chain Challenges

Published

3 days ago

February 20, 2025

RTX

European aircraft manufacturer Airbus has reported solid financial results for 2024, with strong order intake and increased deliveries, further extending its lead over struggling competitor Boeing.

In its annual earnings update on Thursday, Airbus revealed that revenues rose to €69.23 billion, up from €65.45 billion in the previous year. However, adjusted earnings before interest and tax (EBIT) dropped 8% to €5.35 billion, compared to €5.84 billion in 2023. The decline was attributed to restructuring costs in the company’s space division.

Aviation and tourism expert Anita Mendiratta praised Airbus’ performance, stating that the results highlight the company’s focus on fundamentals. “The strong order intake across all divisions signifies sustained market confidence—critical in 2024, the first full year since the pandemic when trade not only recovered but surged,” she said.

Aircraft Deliveries and Orders

Airbus delivered 766 commercial aircraft in 2024, an increase from 735 in 2023, thanks to a strong year-end push. Gross commercial aircraft orders reached 878, with net orders totaling 826 after cancellations.

Looking ahead, Airbus has set a delivery target of 820 commercial aircraft for 2025—a figure lower than its record 863 deliveries in 2019. While some analysts view this target as conservative, Matt Dorset, equity analyst at Quilter Cheviot, noted that it reflects ongoing supply chain issues. “The company will want to avoid another cut to guidance, as occurred in 2024,” Dorset explained.

Airbus lowered its delivery targets in June 2023 due to supply chain disruptions involving engines, aerostructures, and cabin equipment, as well as additional costs in its space systems division. The company continues to face challenges, particularly with Spirit AeroSystems, which is affecting the production of the A350 and A220 models.

Financial Outlook and Dividends

For 2025, Airbus forecasts adjusted EBIT of approximately €7 billion and free cash flow before customer financing of around €4.5 billion. These projections do not account for potential tariffs that could be imposed by a future Donald Trump administration in the United States.

Despite ongoing challenges, Airbus announced an increased dividend of €2 per share for 2024, up from €1.80 the previous year. Additionally, the company proposed a special dividend of €1 per share, with a payment date set for April 24, 2025.

Airbus Extends Lead Over Boeing

Airbus’ stable financial performance contrasts sharply with the difficulties faced by Boeing, which reported a loss of $11.8 billion (€11.3 billion) in 2024—its worst result since 2020. Boeing’s setbacks include a series of safety incidents, strikes, and challenges within its defense programs, further solidifying Airbus’ position as the world’s leading aircraft manufacturer.