Economy

ATHENS (Reuters) – The Greek government is forecasting economic growth of 2.3% in 2025, outperforming Europe’s major economies, thanks to strong tourism revenues, robust consumer spending and investment, a 2025 draft budget showed on Monday.Greece, which is still recovering from a debt crisis that nearly saw the country drop out of the euro zone in 2015, is projecting a 2.2% rise in its economic output this year.The government trimmed its previous estimate for 2025 growth of 2.6% in April due to a stagnating European economy, a key source of investment and tourism in the country, along with high inflation. The estimates in the draft budget are in line with Athens’ fiscal plan unveiled last week and submitted to the European Union for approval.The draft budget saw downside risks from the conflicts in Ukraine and the Middle East, along with possible new geopolitical tensions.More than half of foreign direct investment into Greece comes from northern European countries, while two-thirds of the country’s exports such as agricultural goods, fuel and pharmaceutical products go to the EU.The draft budget includes higher spending of about 3.5 billion euros next year and tax breaks to fund pension hikes and support for vulnerable households.This will be funded by a bigger primary budget surplus, which excludes debt-servicing costs, seen at 2.5% of gross domestic product (GDP) next year, up from 2.4% this year, a key condition for Greece to keep its debt – currently at the highest ratio to GDP in the euro zone – sustainable.Since emerging from a bailout in 2018, Greece has regained its investment grade ratings last year, revived its banking system and relied solely on debt markets for its borrowing needs. But unemployment remains at 10% and the average monthly salary is 20% lower than 15 years ago.Public debt is seen dropping by five percentage points to 149.1% of GDP in 2025 from 153.7% this year. More

In September, Chinese officials unveiled a sweeping package of new policies, including an outsized cut to interest rates and a reduction in existing mortgage costs.The People’s Bank of China also announced a swap program with an initial size of 500 billion yuan designed to give funds, insurers and brokers easier access to funding needed to purchase stocks. The PBOC also said it would provide up to 300 billion yuan in cheap loans to commercial banks in a bid to help them fund share purchases and buybacks by listed companies.Stocks in China posted their best weekly performance in almost 16 years following the announcement last month — an upturn that continued into last week. Writing in a note to clients, the UBS analysts said some market participants are now discussing whether China could roll out a potential fiscal stimulus package worth more than 10 trillion yuan. However, they argued that it may be more reasonable to expect a “more modest package of 1.5 trillion to 2 trillion yuan in the near term, while another 2 trillion yuan to 3 trillion yuan of fiscal expansion” could come next year.”We think a stimulus for 2024 could be announced immediately after the October holiday or around the [third-quarter] data release on Oct. 18, while measures for 2025 could be decided around the time of the Central Economic Work Conference (CEWC) in December 2024,” the UBS analysts said.In a separate note on Sunday, analysts at Morgan Stanley added that the size and timing of the stimulus will likely be viewed “positively” by onshore investors, “as it reaffirms Beijing’s commitment to reflation with more concerted policy efforts, albeit using the time-tested trial-and-error approach.”Consumer prices in China grew at their fastest pace in half a year in August, although the uptick was due largely to a spike in food costs caused by weather disruptions instead of a sustainable recovery in domestic demand.”[W]e are hopeful but not yet confident” China’s shift in policy will lift growth in the world’s second-largest economy, the Morgan Stanley analysts said.(Reuters contributed reporting.) More

The Inflation Reduction Act was a compromise between competing priorities. Evaluating the law on the effectiveness of the $7,500 tax credit for E.V.s is tricky.A team of economists has taken on a central component of the Inflation Reduction Act: the $7,500 tax credit for U.S.-made electric vehicles.The challenge in evaluating it is that the policy has sometimes conflicting goals. One is getting people to buy electric vehicles to lower carbon emissions and slow climate change. The other is strengthening U.S. auto manufacturing by denying subsidies to foreign companies, even for better or cheaper electric vehicles.That’s why totaling those pluses and minuses is complex, but overall the researchers found that Americans have seen a two-to-one return on their investment in the new electric vehicle subsidies. That includes environmental benefits, but mostly reflects a shift of profits to the United States. Before the climate law, tax credits were mainly used to buy foreign-made cars.“What the I.R.A. did was swing the pendulum the other way, and heavily subsidized American carmakers,” said Felix Tintelnot, an associate professor of economics at Duke University who was a co-author of the paper.Those benefits were undermined, however, by a loophole allowing dealers to apply the subsidy to leases of foreign-made electric vehicles. The provision sends profits to non-American companies, and since those foreign-made vehicles are on average heavier and less efficient, they impose more environmental and road-safety costs.Also, the researchers estimated that for every additional electric vehicle the new tax credits put on the road, about three other electric vehicle buyers would have made the purchases even without a $7,500 credit. That dilutes the effectiveness of the subsidies, which are forecast to cost as much as $390 billion through 2031. “The I.R.A. was worth the money invested,” said Jonathan Smoke, the chief economist at Cox Automotive, which provided some of the data used in the analysis. “But in essence, my conclusion is that we could do better.”How the Environmental and Safety Costs of Gas- and Electric-Powered Cars Stack UpMeasuring the cost to society of carbon emissions from driving and manufacturing, local air pollutants and the danger of crashes, a new economic analysis finds that some gas-powered vehicles are less damaging than electric and hybrid vehicles.

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The five least and most costly gas- and electric-powered vehicles
Averages are weighted by the number of each model registered within each powertrain category. Total costs subtract fiscal benefits from gas taxes and electricity bills.Source: Hunt Allcott, Stanford; Joseph Shapiro, U.C. Berkeley; Reigner Kane and Max Maydanchik, University of Chicago; and Felix Tintelnot, Duke UniversityBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

HAMBURG, Germany (Reuters) -The world’s poorest countries are having to prioritize debt service over investments, United Nations Development Programme administrator Achim Steiner said on Monday, scuppering progress towards their sustainable development goals.Speaking at an event in Hamburg, Steiner said the financial crunch meant countries worldwide were struggling to meet the goals – a set of 17 wide-ranging targets such as tackling poverty and hunger, improving access to education and health care, providing clean energy and protecting biodiversity.”For many, least developed countries, they have literally been priced out of the financial markets. They cannot borrow any more money,” Steiner told the Hamburg Sustainability Conference, adding that they must draw down other spending to avoid debt default. “It’s a very extreme situation.”Countries like Ghana, Sri Lanka and Zambia have defaulted on their debt in recent years, while others are struggling to make payments after the global interest rate hiking cycle sent borrowing costs higher.At the same time, the world needs trillions of dollars more per year to meet climate spending goals. Steiner said boosting financing was “absolutely central” to meeting sustainable development goals – something his organisation is monitoring closely.”We have to tackle this issue of our international financial architecture and our international financial system,” Steiner said. “If not, we are going to fall apart in our endeavour to find answers that our citizens are expecting us to find.”World Bank President Ajay Banga, speaking at the same event, said official and multilateral lenders would not be able to provide the $4 trillion needed to reach the goals without help.”That gap is going to need the private sector,” Banga said during a panel discussion. Using public money to de-risk private investment was one way of leveraging multilateral balance sheets, he added, saying the Washington-based lenders had boosted the insurance for investors looking to get involved in renewables in developing world. “We’ve already doubled where we were a year ago. There is more to come.”The World Bank announced in July it had started operating a one-stop-shop loan and investment guarantee platform with the aim of tripling the provision of guarantees and risk insurance provided around the world to $20 billion a year.Reaching the sustainable development goals would require standardizing financing vehicles and making it easier for public private partnerships to get off the ground, German Chancellor Olaf Scholz said. “Without the expertise and investment of the private sector, the sustainable development goals cannot be reached,” Scholz said during a keynote speech. More

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BofA and J.P.Morgan have reduced their estimate to 25 bps from 50 bps after the blowout U.S. nonfarm payrolls data on Friday pointed to a resilient economy.Goldman Sachs, Barclays, Macquarie and Deutsche Bank reiterated their forecasts of a 25 bps cut each in November and December.Here are the forecasts from major brokerages after the jobs report: Rate cut estimates (in bps) 2024 Nov Dec 2025 Fed Funds Rate at end of 2025 BofA Global Research 25 25 125 3.0%-3.25% (end 2025) Deutsche Bank 25 25 125 3.25%-3.50% Barclays 25 25 75 3.50%-3.75% Macquarie 25 25 100 3.25%-3.50% (through (through June 2025) June 2025) Goldman Sachs 25 25 100 3.25%-3.50% (through (through June 2025) June 2025) J.P.Morgan 25 25 150 3.0% (through (through September 2025) September 2025) UBS Global Wealth 50 100 3.25%-3.50% Management * UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group Here are the forecasts from major brokerages ahead of the jobs data: Rate cut estimates (in bps) 2024 Nov Dec 2025 Fed Funds Rate at end of 2025 BofA Global Research 50 25 125 UBS Global Wealth 50 100 3.25%-3.50% Management Deutsche Bank 25 25 125 3.25%-3.50% Barclays 25 25 75 3.50%-3.75% Morgan Stanley 25 25 100 3.25%-3.50% (through (through June 2025) June 2025) Macquarie 25 25 100 3.25%-3.50% (through (through June 2025) June 2025) Goldman Sachs 25 25 100 3.25%-3.50% (through (through June 2025) June 2025) Citigroup 50 25 J.P.Morgan 50 25 HSBC 25 25 100 3.25%-3.50% (through (through June 2025) June 2025) * UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group More