Global Economic Policy and Trade Mechanisms

Carbon Border Adjustment Mechanism (CBAM) - European Union

• Objective: To prevent 'carbon leakage' (companies moving production to countries with lax climate policies) and ensure imported goods meet the environmental standards applied to EU domestic production.
• Scope: Targets carbon-intensive imports, including iron, steel, cement, aluminum, fertilizers, electricity, and hydrogen.
• Timeline:

  Phase	Start Date	Requirement
  Transitional	October 1, 2023	Reporting obligations only (no financial adjustment).
  Full Implementation	January 1, 2026	Financial adjustment based on embedded carbon emissions.

G7 Summit Outcomes (Recent Meeting)

• Supply Chains: Commitment to diversifying critical mineral supply chains away from single-source nations through enhanced partnerships and multilateral agreements.
• PGII (Partnership for Global Infrastructure and Investment): Reaffirmed target of mobilizing $600 billion by 2027 for sustainable infrastructure projects in developing nations, focusing on clean energy and digital connectivity.
• Sanctions Coordination: Agreed upon stricter enforcement mechanisms for existing sanctions regimes targeting specific nations involved in current conflicts, focusing particularly on financial loopholes and technology transfers.

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Domestic Economy and Demographic Shifts

Central Bank Monetary Policy Review

• Rate Decision: Benchmark interest rates were maintained at 6.5% for the sixth consecutive review period.
• Inflation Assessment: Core inflation remains elevated at 4.8%, resisting the desired target range. This persistence necessitated the current pause.
• Forward Guidance: Rate easing is contingent upon a sustained decline in headline inflation and evidence of GDP growth stabilization in the forthcoming second fiscal quarter (Q2) figures.
• Liquidity: The central bank will continue using variable rate reverse repo (VRRR) auctions to absorb surplus liquidity from the banking system.

Key Findings of the UN World Population Report

• Median Age Increase: The global median age is rising rapidly, moving from 27 in 2020 to a projected 34 by 2050, largely due to declining global fertility rates (currently averaging 2.3 births per woman).
• Policy Implications: This demographic shift demands significant reallocation of public expenditure toward:
  • Geriatric care infrastructure and specialized healthcare services.
  • Comprehensive reforms of existing pension and social security systems to ensure long-term solvency.
  • Investment in technological solutions to enhance productivity among a shrinking working-age population.