Uncertainty persists despite EU-US trade deal: Lagarde - Economy
Speaking at a panel at the World Economic Forum in Geneva, Lagarde said the deal had left the effective US tariff rate for EU goods at between 12 and 16 percent.
The tariff rate was "somewhat higher" than the ECB had forecast, she said, adding that President Donald Trump's plans for sector-specific levies on pharmaceutical goods and semiconductors remain unclear.
The ECB expects eurozone activity to slow in the third quarter of 2025 after a strong start to the year.
Lagarde said that "global growth has remained broadly steady so far" but cautioned that "this resilience has been mainly driven by tariff-induced distortions of economic activity".
She noted that, in the first quarter of the year, "importers boosted their inventories in anticipation of higher tariffs".
Trump has imposed painful import tariffs on countries around the world in an attempt to boost US manufacturing and reduce his country's colossal trade deficit.
He had initially threatened steep 30 percent tariffs on EU imports but late last month Brussels and Washington reached a deal which lowered that to 15 percent, with the bloc trying to secure exemptions for certain sectors.
However, in recent weeks Trump has raised the possibility of additional tariffs hitting certain sectors such as pharmaceuticals, which account for 20 percent of the the EU's exports to the United States.
The EU-US deal was struck a few days after a meeting of the ECB's governing council at which it decided to hold interest rates steady after consecutive cuts.
That was seen as a sign of caution as policymakers waited to see what effects the US tariffs would have.
In its last macroeconomic projections in June, the ECB lowered its inflation forecast to two percent for 2025 due to lower energy prices and a strengthening euro.
At the same time it lowered its forecast for GDP growth in 2026 slightly to 1.1 percent.
Lagarde said that new forecasts set to published in mid-September will take into account "the implications of the EU-US trade deal for the euro area economy".
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Al-Ahram Weekly
2 hours ago
- Al-Ahram Weekly
The CBAM is coming - Economy - Al-Ahram Weekly
Egyptian companies will need to shape up as the implementation of the European Union's Carbon Border Adjustment Mechanism nears. Egypt is only four months away from having to abide by Carbon Border Adjustment Mechanism (CBAM), a tax that will apply to goods imported from outside the European Union (EU). It imposes a charge on the embedded carbon content of imports — defined as carbon emitted during the production of carbon-intensive goods — equal to the charge imposed on goods produced within the EU. With the January 2026 deadline for the implementation of the CBAM closing in, the government has been mobilising efforts to enable exporters to face the challenges posed by the new tax. The state is keen to take steps to enhance the readiness of the Egyptian industrial sector to keep pace with international environmental changes, particularly in the light of the application of the CBAM, Deputy Prime Minister for Industrial Development and Minister of Industry and Transport Kamel Al-Wazir said during a meeting last month with Minister of Planning and International Cooperation Rania Al-Mashat. According to Ahmed Rushdy, advisor to the Egyptian Stock Exchange (EGX) for Sustainability and Environmental Markets, starting in 2026 EU importers of products like steel, aluminum, fertilisers, cement, electricity, and hydrogen will have to buy CBAM certificates that reflect the carbon emissions from their production. This is a direct challenge for Egyptian exporters because the EU is Egypt's largest trading partner. Egypt's annual exports to the EU amount to around $14 billion, Magdy Al-Nabrawy, head of the Business Development Sector at the General Authority for Investment and Free Zones (GAFI), said during a conference aimed at raising awareness of the CBAM. Egyptian exports include products from sectors to which the CBAM will apply, namely steel, aluminum, and fertilisers, which are energy-intensive industries with significant emissions. 'If Egyptian exporters do not act quickly to reduce their carbon footprint, they will face additional costs at the EU border,' Rushdy said. These costs could significantly reduce the competitiveness of Egyptian products, he explained. Rushdy said exporters must start measuring and reporting their emissions, because the failure to do so will result in the EU applying high default values. Companies must also invest in cleaner production technologies to lower emissions in the long term. 'The CBAM is not just an environmental regulation. It is an economic game-changer that demands rapid adaptation from Egyptian industries.' Egyptian firms should have got ready to adapt to the CBAM a long time ago, Osama Henein, the founder and CEO of Hydrogen Intelligence-Egypt, told Al-Ahram Weekly. The CBAM came into effect in 2023, starting with a transitional phase that runs until the end of 2025. Henein said the fertiliser industry could be the quickest to adapt to the new rules, but its factories will need some retrofitting to be able to use green hydrogen for fuel instead of natural gas. While this could cost between $30 million and $50 million and would need around a year, it would be cheaper and require less time than the construction of greenfield ammonia plants, he explained. On another positive note, most steel plants built in Egypt in the past 15 years utilise direct reduction of iron technology, a process that produces metallic iron from iron ore without smelting, representing 60 per cent of Egypt's steel production capacity. The plants can be easily adapted to utilise green hydrogen instead of natural gas or other fossil fuels, thus reducing carbon emissions, he said. Green power: Henein said that Egypt should also have a dedicated green corridor for green electricity. Currently, all the energy produced from clean sources is transmitted via the national electricity network, he explained, adding that around 12 to 15 per cent of the 60 Gigawatts produced annually is from renewable sources. Having a dedicated green corridor would make it easier for producers to produce green hydrogen and calculate their carbon footprint. Factories could also build their own renewable energy network, but vacant land nearby is not always available, he noted. A second option, he suggested, could be a shared mini or micro smart grid whereby adjacent factories could build a green electricity network that serves them all. Until factories get their operations in order, they could export to other markets that do not apply the CBAM, Henein said, but this could mean risking losing their market share in Europe. According to Henein, Egyptian fertilisers are in demand in the European market because of their high quality, encouraging European importers to pay a premium above the market price. For Egyptian products to enter the EU, EU importers will need to purchase carbon credits certificates or International Renewable Energy Certificates (IRECs) to cover the carbon price that would have been paid if the products were produced in the EU. If the non-EU producer has already paid a carbon price for producing the imported goods in a third country, that cost can be deducted from the CBAM obligation subject to the carbon price of the third country. This should encourage the government to impose a carbon tax domestically, Henein said, because firms will be paying it anyway — if not in Egypt, then in the EU. In the process towards compliance with the CBAM financing can be a problem. According to Rushdy, financing is often the biggest barrier to change. Retrofitting a steel plant, switching to green hydrogen, or modernising fertiliser production lines can cost tens of millions of dollars. Many companies, especially smaller ones, simply cannot shoulder these investments alone. A July 2025 research paper titled 'Is Egypt ready for the EU Carbon Border Adjustment Mechanism (CBAM)? Evidence from FirmLevel Data' authored by Yasmine Kamal, Mahmoud Mohieldin, and Myriam Ramzy found that financial constraints negatively impact a firm's investment in machinery and vehicle upgrades, which are capital intensive. According to focus group discussions and surveys with firms making steel, fertilisers, and cement, the researchers found that a lack of funds was a top challenge for their decarbonisation plans. Al-Mashat said during her meeting with Al-Wazir in July that the two ministries were coordinating to launch the first national platform to mobilise financing and technical support for the industrial sector. 'We are working to maximise the industrial sector's benefit from international partnerships to increase the competitiveness of Egyptian exports and reduce carbon emissions,' she said. CBAM ready: According to Rushdy, this would be a highly significant and welcome development. By officially committing to a national climate finance platform, the government is signaling that CBAM-readiness is a strategic economic priority, not just an environmental concern, he said. Modeled on the success of programmes like the Nexus for Water, Food, and Energy (NWFE), the platform would be central hub that connects Egyptian industries with the funding, expertise, and partnerships they need to decarbonise and remain competitive in the EU market, he explained. The platform could connect companies with concessional loans, grants, and blended finance arrangements from international climate funds, development banks, and private investors. By lowering the cost of capital and de-risking projects, it would make large-scale decarbonisation achievable, he noted. Cherine Khallaf, director of Government Affairs and Public Policy at Lynx Strategic Business Advisors, agrees. This financing is likely to speed the concerned sectors' decarbonisation and enhance their compliance with EU regulations, safeguarding Egypt's export markets and helping the country benefit from an increased market share, she told the Weekly. Moreover, including small-scale industrial projects in the supply chain can help modernise the industrial sector and encourage innovation to leapfrog towards green technologies, she added. Khallaf suggested a multi-tiered system whereby financing can target both brownfield and greenfield projects. Brownfield finance would focus on retrofitting, carbon offsetting, and resources efficiency measures, while greenfield projects would benefit from the funding of renewable energy and de-risking green hydrogen, eco-design, and circular economy measures. Equally important is the technical support side, Rushdy said. Many exporters are still unfamiliar with how to measure their emissions, comply with EU reporting requirements, or verify their data through accredited bodies. He explained that without technical know-how, companies cannot develop accurate emissions data or identify the most effective decarbonisation strategies. Rushdy praised steps already taken by the government, pointing out that the Cabinet approved the national CBAM implementation plan in December 2024, sectoral roadmaps and timelines are being finalised, and a permanent National Committee for Carbon Reduction is in place to oversee progress. According to the research paper, both firms and the government have a role to play in improving the competitiveness of Egyptian exporters of CBAM products in the EU market. Firms need to identify their financial need and seek green financing, especially loans and grants that are offered through international partnerships that need to be expanded in both volumes and firms coverage. Firms also need to grasp the opportunities provided by Egypt's voluntary carbon market, which was first launched in August 2024, the paper said. The development of this market could facilitate the green transition of firms, as the issuers of carbon credits, resulting from their reduction of emissions, can mitigate their decarbonisation costs by mobilising funds, and the buyers of these credits can use them to offset their carbon footprints. However, according to the paper, it remains uncertain whether the CBAM regulations will recognise the use of such credits. Meanwhile, government bodies should provide financial and technical assistance and capacity building to firms, especially in carbon measurement. The government should also establish and identify the national institutions that are specialised and accredited in providing green technical assistance to firms, the paper said. It should assist firms, especially small and medium-sized ones, in securing the financing of the green transition. That assistance could be in the form of tax incentives or investment subsidies to finance green investments, the researchers suggested. * A version of this article appears in print in the 21 August, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link:
Egypt Independent
8 hours ago
- Egypt Independent
Ninth Tokyo International Conference on African Development talks new economic areas in Middle East
Japanese Prime Minister Shigeru Ishiba proposed the 'Indian Ocean Economic Area-Africa Initiative' as a single economic area in cooperation with the Middle East, alongside a pledge with the African Development Bank to provide concessional loans of up to US$5.5 billion for infrastructure development and other projects on the African continent. This came at the opening of the Ninth Tokyo International Conference on African Development (TICAD 9) on Wednesday, hosted by the Japanese government in the presence of Egypt's Prime Minister, the Secretary-General of the United Nations, and a number of African leaders. The conference was held under the theme 'Cooperation in Finding Innovative Solutions to Problems.' Ishiba noted that for Africa to achieve further growth, 'It is essential to enhance regional integration and interconnectivity that transcend national borders.' He announced the formation of a new study committee comprising representatives from industry, academia, and government, with the aim of strengthening economic cooperation between Japan and Africa. He also expressed his desire to accelerate the development of the Nacala Corridor, a logistics network extending from Africa's interior to the Indian Ocean. He confirmed that impactful investments of $1.5 billion will be implemented, allocated to combating climate change and supporting small and medium-sized enterprises. He also pledged to train 300,000 people over the next three years, including 30,000 in the Artificial Intelligence (AI) field, to empower youth and women and provide them with job opportunities. He also pledged to improve the level of education for 10 million children and contribute up to $550 million over five years. Ishiba added that the TICAD conference, being held for the first time in Japan in six years, relies on engagement with the international community. Tokyo believes in the future of Africa, with whom it has a relationship dating back to the sixteenth century. His own relationship with Africa dates back to 2000, during his visit to Senegal, back when he served as Deputy Minister of Agriculture. He pointed out that TICAD carries with it a shared creativity in seeking solutions through sustainable growth, employing youth and women, utilizing regional integration and interconnectedness, as well as benefiting from AI and satellite data to find solutions to pressing issues. He continued: 'We ask Africa to cooperate in solving the issues facing Japan, which are represented by the decline in population in rural areas, agricultural areas have also decreased.' To solve these troubles, Africa must be leveraged, he noted, referring to the presence of African youth in some regions. He noted that Japan imports platinum and copper used in electric cars. The President of Angola and Chairman of the African Union, João Lourenço, said that Japan is an inspiring role-model of a vibrant country that has constantly risen from disaster and is an example for African countries targeting development. Africa still faces challenges that hinder its economic growth, especially following the outbreak of the coronavirus pandemic, which constituted an unprecedented test and hindered development plans at the local and continental levels. Noting that the issue of poverty is one of the major problems and there is no room for isolation and everyone must work together to promote peace, security and development, he said: 'Japan will remain a reliable partner for Africa and Angola has benefited from the partnership with concessional financing from Japan, which is an approach different from other creditors.' He continued: 'The Middle East is experiencing the Gaza tragedy, and what the Palestinian people are being subjected to is an open embarrassment to the conscience of humanity, and the international community is still standing by, not watching.' 'The Security Council is in need of reform.' UN Secretary-General Antonio Guterres said that Africa has the human resources to qualify it for progress, despite the fact that there is a lot of inequality in these countries. The initiative must be 'with Africa, not for Africa,' he said, and Africa's voice must be stronger than before. He added that efforts must be made to resolve the debt problem, as African countries spend a lot of their money paying off debts. He further noted that significant investments are needed to create job opportunities, especially in the digital environment, and that Japan can empower countries to keep pace with global progress, in addition to strengthening artificial intelligence. 'It must mean inclusion of Africa and that African youth are responsible for building their countries in artificial intelligence and sports through the participation of women,' he said. The UN Secretary-General emphasized that without peace, there can be no progress and prosperity.
Mid East Info
10 hours ago
- Mid East Info
Crude oil supported by US inventory decline, robust demand, and weak positioning – Saxo Bank - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank Crude oil remains trapped in relatively tight ranges, with WTI finding support around USD 62 and Brent near USD 65. The market continues to weigh a mix of bullish and bearish drivers that, which together with thin summer liquidity, are keeping prices boxed in while traders search or wait for the next decisive catalyst. On the supportive side, the latest weekly EIA report showed a bigger-than-expected 6 million barrel draw in U.S. crude inventories, the largest since June. The reduction was driven by a combination of robust refinery runs, now operating at the highest seasonal level since 2019 – and a pick-up in exports, which rose to an April high of 4.38 million barrels day. This combination highlights underlying demand strength in refined products, especially jet fuel which also reached a four-year seasonal high at 1.9 million barrels a day. These developments together with lingering doubts about a successful adoption of a Russia-Ukraine ceasefire have provided a near-term price floor. Another supportive element stems from geopolitics, specifically Washington's ongoing efforts to curb India's imports of Russian crude and refined products. India has become one of Moscow's largest energy customers since 2022, and any material reduction in these flows would tighten balances and support prices. While Russia has pushed back, suggesting India will maintain its current buying levels, the issue remains a potential source of price support. At the same time, downside risks continue to dominate the medium-term outlook. OPEC+ is in the process of adding close to 2.5 million barrels per day of supply this year, spread across eight members. This unwind of previous voluntary cuts comes at a time when demand growth is slowing. Both the IEA and other forecasters have flagged the risk of oversupply into Q4 and, more importantly, into 2026. However, whether it will reach record levels as predicted by the IEA remains doubtful as high-cost producers and perhaps even the involved OPEC+ members may lower production should prices fall much below current levels. In the short-term, the focus remains firmly on US-brokered peace efforts between Russia and Ukraine with recent price weakness being driven by an assumption that a peace deal could eventually ease sanctions on Russia and restore supply channels. The reality is more complicated, with any easing of sanctions likely to be gradual at best, but headline sensitivity reigns and prices will respond to the ebb and flow of news. In addition, from a demand perspective the macroeconomic outlook remains key, and traders will be watching incoming data and central bank action from the major consumers of energy, led by the U.S. and China. Beyond these fundamental drivers, it is also worth watching speculative positions held by managed money accounts – or speculators as they are often called – in the major futures contracts. Especially their recent positioning in WTI, where the NYMEX WTI last week collapsed to a 19-year low, and when combined with ICE WTI, a net short position emerged for the first time on record. This creates the conditions for short-covering rallies, particularly if support levels continue to hold and inventory draws persist. It helps explain why downside breaks have been limited despite the constant talk of surplus risk ahead. Altogether, crude oil is balanced between near-term support from strong refining demand, exports and low speculative length, and medium-term pressure from OPEC+ supply growth and slowing demand expectations, and not least geopolitical developments. With Brent anchored around USD 65 and WTI near USD 62, the market seems unwilling for now to chase a breakout in either direction.
