The European Bank for Reconstruction and Development (EBRD) has shown that the wars in Ukraine and the Middle East, as well as the high cost of borrowing, have negatively affected the economies of the countries covered by the EBRD.
According to the updated forecasts of the EBRD, in 2024, GDP growth across the 40 or so countries it covers will accelerate to 3% (previous forecast: +3.2%) from 2.5% in 2023.
"Despite the stronger growth expected this year, there is a lot of uncertainty. The sad news is that our countries of operation are now affected by a fallout of not one, but two wars: the war in Ukraine and the war in Gaza," the EBRD said, adding that the revision of the forecast for 2024 was partly caused by slower than expected growth in Central Europe and the Baltic states.
The EBRD also lowered its forecast for GDP growth in the southern and eastern Mediterranean countries to 3.4% for 2024 and 3.9% for 2025. Commenting on its decision, the EBRD pointed to Gaza spillovers and slow reform progress in Egypt.
The EBRD also stated that investment flows have changed against the background of geopolitical events: China's share of foreign direct investment in the EBRD regions jumped to 39% in 2023 from less than 10% in 2022, with Egypt, Morocco and Serbia benefiting from this.