Arab Finance: The European Bank for Reconstruction and Development (EBRD) is likely to lower global growth forecasts for its regions by up to 0.4 percentage points in the next outlook, according to a statement.
The bank expects that the current US-Israel-Iran conflict might affect the region’s economic activity by way of higher energy and fertilizer prices, disruptions to trade and tourism flows, and tighter financing conditions.
Beata Javorcik, EBRD Chief Economist, commented: “The conflict shows how quickly geopolitical shocks can ripple through energy markets, supply chains, and financial conditions.”
“Rising energy prices come at an already challenging time for the European manufacturing sector, while the broader fallout from the conflict is likely to strain government budgets already overstretched by high defence spending in central Europe and elevated debt-servicing costs in the southern and eastern Mediterranean and sub-Saharan Africa. The effects of the conflict are likely to linger beyond the end of hostilities.”
If oil remains above $100 per barrel for an extended period and supply-chain disruptions in chemicals and metals continue, global growth could retreat by at least 0.4 percentage points, while inflation may increase by 1.5 percentage points.
Remittances from GCC countries, which mark a fundamental source of income for economies including Lebanon, Jordan, and Egypt, may come under pressure, the bank added.
The EBRD indicated that countries with high dependence on energy, fertilizer, and food imports, strong economic ties to the Gulf, and limited fiscal buffers are most vulnerable. These include Egypt, Iraq, Jordan, Kenya, Lebanon, Moldova, Mongolia, North Macedonia, Senegal, Tunisia, Türkiye, and Ukraine.
