Latest news with #Javorcik
Qatar Tribune
13-05-2025
- Business
- Qatar Tribune
EBRD slashes growth forecast again on tariffs, uncertainty
Agencies Tariffs, conflicts and economic concerns in major economies like Germany and China have prompted the European Bank for Reconstruction and Development (EBRD) to lower its economic growth forecasts for the fourth consecutive time, the lender announced on Tuesday. In its latest report, which covers economies in emerging Europe, central Asia, the Middle East and Africa, the EBRD lowered its previous forecast for 2025 made in February by 0.2 percentage points to 3%, with downward revisions across most economies. 'The revision is a result of increased global policy uncertainty, weaker external demand and the direct and indirect effects of announced increases in import tariffs,' the London-based bank said. It sees a modest recovery to 3.4% in 2026. 'Almost no country remains untouched by what's happening in the world,' EBRD Chief Economist Beata Javorcik said. 'The biggest effect on our countries is indirect via changes in prospects for Germany and China.' Slovakia and Hungary will suffer the largest direct hit from U.S. tariff increases, with 2025 growth forecasts revised down by 0.5 percentage points, to 1.4% and 1.5%, respectively. Both countries are heavily geared toward the automotive industry. The report was compiled before the latest news on the U.S. and China reaching a deal to temporarily slash tariffs. 'Firms are halting investments and waiting to see what will happen,' Javorcik said. 'We have this very big shift of mindset from resilience of global value chains in terms of security of supply ... now, security of market access is the key concern.' The United States in April imposed a 10% 'baseline' tariff on nearly all its trading partners, along with sector-specific levies of 25% on cars, steel and aluminium. These are expected to have 'significant global repercussions, including for the EBRD regions,' the bank said. The analysis indicates that the average effective U.S. tariff on imports from the bank's regions is estimated to surge from 1.8% in 2024 to 10.5%, assuming unchanged composition of exports, it added. Projects underway are already being slowed down and delayed, even as the U.S. paused blanket new 'reciprocal' tariffs and said it was ready to negotiate on other levies it imposed as part of U.S. President Donald Trump's aim to convince firms to bring manufacturing back to the United States. But the economic hits to Germany, China and other large European countries are looming; Germany is the largest trading partner for 10 EBRD economies, with exports to it accounting for nearly a quarter of gross domestic product (GDP) in the Czechia, and close to 20% in Slovakia, Hungary and North Macedonia. While Germany saw a slight rebound in growth at the start of 2025 after two years of recession, the outlook for Europe's largest economy has been clouded by U.S. tariffs. That adds to problems already felt in its manufacturing sector and as its economy is expected to stagnate this year. While Europe's push to boost defense spending could be a boon for certain countries, including Poland, Türkiye and the Czechia, 'there is a very real concern that the increase in defense spending will crowd out other expenditure.' Meanwhile, while the International Monetary Fund (IMF) expects average debt in EBRD regions to remain broadly stable at 52% of GDP from 2025-2029, Javorcik said that was 'too optimistic given what we are seeing on the ground.' The IMF, Javorcik said, is assuming revenues will be high and that new spending will be matched by cuts elsewhere. 'We think that actually some budget deficits will be higher,' she said. Javorcik said the debt and reliance of many countries on international bond borrowing add an element of risk; already, Egypt is spending 13% of its GDP servicing debt. 'If there is a flight to safety, if investors choose to go to safer havens, that means our countries might be exposed to that shock,' she said. For Ukraine, the EBRD revised its forecast for this year downward by 0.2 percentage points to 3.3%, due to weaker European Union demand and continued damage to energy infrastructure from Russian attacks. In Türkiye, the bank said it expects the economy to grow by 2.8% in 2025, 0.5 percentage points lower than its February 2025 forecast due to lower domestic and external demand and tighter-than-expected monetary policy. It expects the Turkish economy to then grow by 3.5% in 2026, unchanged from previous forecasts. Türkiye's downward revision reflects expectations of tighter domestic financial conditions as heightened uncertainty weighs on domestic demand, as well as weakening external demand due to increased uncertainty around global trade policy, the bank said. 'Downside risks stem from still-high inflation and the impact of tighter-for-longer global financial conditions on Türkiye's substantial short-term external financing needs,' it noted. The report noted recent improvements in the economy's external position, with net exports rising and the current account deficit declining steadily in the 12 months to February this year. However, inflows of foreign direct investment (FDI) remained relatively low at $12.2 billion, it added. The EBRD invested a record 2.6 billion euros ($2.89 billion) in Türkiye in 2024, driven by the private sector's appetite for green investments and the bank's continuing support for regions affected by the devastating February 2023 earthquakes. The bank's cumulative investment in the country stands at over 22 billion euros, with its current portfolio in the country totalling around 8 billion euros. The EBRD was founded in 1991 to help former Soviet bloc nations embrace free-market economies, but has since extended its reach to the Middle East and North Africa.
France 24
13-05-2025
- Business
- France 24
US tariffs hit Central Europe, Balkans growth: Europe bank
The London-based European Bank for Reconstruction and Development has downgraded its growth forecast for the regions, anticipating tariffs fallout owing to their heavy dependence on Germany's struggling economy. The United States in April imposed a 10 percent "baseline" tariff on nearly all US trading partners, along with sector-specific levies of 25 percent on cars, steel and aluminium. "Recent changes in US trade policy have left very few countries unaffected," Beata Javorcik, chief economist at the EBRD, told AFP. For the identified EBRD regions, "the main effect is operating indirectly via the German market", she added. Overall, the economies of the countries in which the bank operates should grow by 3.0 percent this year, slightly lower than anticipated in February, according to the institution. While Germany saw a slight rebound in growth at the start of 2025 after two years of recession, the outlook for Europe's largest economy has been clouded by US tariffs. That adds to problems already felt in its manufacturing sector and as its economy is expected to stagnate this year. Many Central European and Balkan states rely on exports to Germany to support their economies. Czech exports to Germany account for a quarter of the country's gross domestic product, while for North Macedonia, it is 20 percent, according to Javorcik. The share is also strong for Slovakia and Hungary and to a lesser extent for Poland and Slovenia. The trade war between Washington and Beijing has also dampened growth prospects in the EBRD regions. However, Javorcik expressed optimism following a US-China agreement on Monday to slash tariffs, as well as a US-UK trade agreement last week. It "gives us hope that there will be an agreement reached between the EU and the US, which will improve growth prospects" for the European Union, she said. This in turn would "spill over positively onto our regions of operations". The EBRD was founded in 1991 to help former Soviet bloc nations embrace free-market economies, but has since extended its reach to the Middle East and North Africa. The EBRD's economic updates coincided with the start of its annual conference being held in London until Thursday and expected to approve the bank's strategic and capital framework for the next five years. It is also set to mark the start of the bank's move into sub-Saharan Africa by making Benin, Ivory Coast and Nigeria countries of operation.
Int'l Business Times
13-05-2025
- Business
- Int'l Business Times
US Tariffs Hit Central Europe, Balkans Growth: Europe Bank
Economic growth in Central Europe and the Balkans is expected to be strained this year by US President Donald Trump's tariff policies, Europe's development bank forecast Tuesday. The London-based European Bank for Reconstruction and Development has downgraded its growth forecast for the regions, anticipating tariffs fallout owing to their heavy dependence on Germany's struggling economy. The United States in April imposed a 10 percent "baseline" tariff on nearly all US trading partners, along with sector-specific levies of 25 percent on cars, steel and aluminium. "Recent changes in US trade policy have left very few countries unaffected," Beata Javorcik, chief economist at the EBRD, told AFP. For the identified EBRD regions, "the main effect is operating indirectly via the German market", she added. Overall, the economies of the countries in which the bank operates should grow by 3.0 percent this year, slightly lower than anticipated in February, according to the institution. While Germany saw a slight rebound in growth at the start of 2025 after two years of recession, the outlook for Europe's largest economy has been clouded by US tariffs. That adds to problems already felt in its manufacturing sector and as its economy is expected to stagnate this year. Many Central European and Balkan states rely on exports to Germany to support their economies. Czech exports to Germany account for a quarter of the country's gross domestic product, while for North Macedonia, it is 20 percent, according to Javorcik. The share is also strong for Slovakia and Hungary and to a lesser extent for Poland and Slovenia. The trade war between Washington and Beijing has also dampened growth prospects in the EBRD regions. However, Javorcik expressed optimism following a US-China agreement on Monday to slash tariffs, as well as a US-UK trade agreement last week. It "gives us hope that there will be an agreement reached between the EU and the US, which will improve growth prospects" for the European Union, she said. This in turn would "spill over positively onto our regions of operations". The EBRD was founded in 1991 to help former Soviet bloc nations embrace free-market economies, but has since extended its reach to the Middle East and North Africa. The EBRD's economic updates coincided with the start of its annual conference being held in London until Thursday and expected to approve the bank's strategic and capital framework for the next five years. It is also set to mark the start of the bank's move into sub-Saharan Africa by making Benin, Ivory Coast and Nigeria countries of operation.
Business Recorder
13-05-2025
- Business
- Business Recorder
EBRD trims growth forecast again as tariffs and wars loom
LONDON: Tariffs, wars and economic worries in powerhouse economies such as Germany and China led the European Bank for Reconstruction and Development (EBRD) to cut its economic growth forecasts for the fourth straight time, the lender said on Tuesday. In the report, which covers economies in emerging Europe, central Asia, the Middle East and Africa, the EBRD lowered its previous forecast for 2025 made in February by 0.2 percentage points to 3%, with downward revisions across most economies. 'Almost no country remains untouched by what's happening in the world,' EBRD Chief Economist Beata Javorcik said. Awaiting US cash, EBRD gives funders till end of the year to pay up 'The biggest effect on our countries is indirect via changes in prospects for Germany and China.' Slovakia and Hungary will suffer the largest direct hit from US tariff increases, with 2025 growth forecasts revised down by 0.5 percentage points, to 1.4% and 1.5%, respectively. Both countries are heavily geared towards automotive industries. The report was compiled before the latest news on the US and China reaching a deal to temporarily slash tariffs. 'Firms are halting investments and waiting to see what will happen,' EBRD Chief Economist Beata Javorcik said. 'We have this very big shift of mindset from resilience of global value chains in terms of security of supply … now, security of market access is the key concern.' Projects underway are already being slowed down and delayed, even as the US paused blanket new 'reciprocal' tariffs and said it was ready to negotiate on other levies it imposed as part of US President Donald Trump's aim to convince firms to bring manufacturing back to the United States. But the economic hits to Germany, China and other large European countries are looming; Germany is the largest trading partner for 10 EBRD economies, with exports to it accounting for nearly a quarter of GDP in the Czech Republic, and close to 20% in Slovakia and Hungary. While Europe's push to boost defence spending could be a boon for certain countries including Poland, Turkey and the Czech Republic, 'there is a very real concern that the increase in defense spending will crowd out other expenditure.' And while the IMF expects average debt in EBRD regions to remain broadly stable at 52% of GDP from 2025-2029, Javorcik said that was 'too optimistic given what we are seeing on the ground.' The IMF, Javorcik said, is assuming revenues will be high and that new spending will be matched by cuts elsewhere. 'We think that actually some budget deficits will be higher,' she said.
Yahoo
14-03-2025
- Business
- Yahoo
Direct impact of US tariffs on EBRD to remain limited, says Chief Economist
The European Bank for Reconstruction and Development (EBRD), in its recently released Regional Economic Prospects report, cites the uncertainty surrounding trade policies among the main reasons for revising global growth projections for 2025 from 3.5% to 3.2%. The US government has now threatened 25% tariffs on Canadian and Mexican imports and doubled levies on Chinese goods to 20%. While the direct effects of these policies have been widely discussed, the consequences for other countries remain unclear. Uncertainty surrounding trade regulations can in itself 'have a significant detrimental effect on trade, investment, and production', said the EBRD. What will also determine global trade patterns is whether the tariffs are applied universally or selectively. For EBRD regions, however, the direct impact of US tariffs is expected to be limited. According to EBRD Chief Economist Beata Javorcik: 'The direct effect of possible US tariffs is going to be limited simply because relatively few countries in Eastern Europe or Central Asia export significant quantities to the US. What's going to matter more is the indirect effect.' Javorcik explained that diminished economic growth in advanced Europe will have a ripple effect on their trading partners in EBRD countries. Additionally, US policies may influence emerging markets through two critical channels – cuts to US financial aid and interest rates. 'Discontinuation of financial assistance is going to be felt in Ukraine, Lebanon, Moldova and Mongolia. At the same time, most observers expect the US interest rates to remain high for longer and that will mean higher borrowing costs in international markets for most countries. And this will matter particularly for countries with a high share of external debt in foreign currency,' noted Beata Javorcik. Related China to impose retaliatory tariffs on certain Canadian imports as trade war intensifies Trump temporarily suspends tariffs on Mexico and Canada's carmakers Trade tensions created by the US, combined with the ongoing war in Ukraine, are reshaping foreign direct investment (FDI) patterns. Investment between the West, specifically Europe and countries that have imposed sanctions on Russia, and the East, including Russia, China and others, have decreased significantly. As a result, the majority of that investment has been redirected to 'connector economies' – countries maintaining strong relations with both blocs. 'We are seeing reconfiguration of global flows of FDI,' said Javorcik. 'What we see is a big decline in inflows to China and Germany, and increased inflows to India, for instance. But what's particularly interesting is big increases in inflows to the United Arab Emirates, Egypt, Saudi Arabia, Uzbekistan and Kazakhstan – countries that pursue multi-vector geopolitical policies. And these countries are receiving FDI from everywhere.' Central Asia and the Caucasus have benefitted the most from this shift. Compared to 2021, countries like Kazakhstan, the Kyrgyz Republic, Georgia and Armenia have seen a 90% rise in exports from the EU in 2024, due to the intermediated trade. Export figures from 2024 are, however, 5% lower than in 2023. Javorcik noted that Central Asia is exhibiting the fastest growth, that's 'twice the speed of other countries of operations'. The factor driving growth in this region is the overall decrease in inflation across EBRD regions and the increase in real wages. In Central Asia and the Caucasus, wages are now exceeding pre-pandemic levels greatly, fuelling greater purchasing power and consumer spending. In contrast, real wages in EU-EBRD economies remain 9% below pre-Covid levels. Increased investment interest and growing purchasing power has led to record EBRD commitments in Central Asia. In 2024, the bank 'invested €2.26 billion through 121 projects in six regional economies,' reflecting a strategic focus on these emerging markets. As the global economic landscape continues to shift, the resilience of EBRD economies will depend on their ability to navigate trade disruptions and attract diversified investment. The long-term effects of US policies, geopolitical tensions, and evolving trade relationships will influence the region's economic trajectory in the years ahead. Sign in to access your portfolio
