The war and extreme weather events are hindering economic growth in the countries where the European Bank for Reconstruction and Development (EBRD) operates, according to the institution’s semi-annual report published on Thursday.
The EBRD has slightly downgraded its forecast for GDP growth, projecting an increase of 2.8% this year and 3.5% next year. This marks the second downward revision for the lender, which covers emerging Europe, Central Asia, the Middle East, and Africa, according to Agerpres. “As I travel through European cities, I notice a growing sense of pessimism, with the continent impacted by expanding conflicts and rising energy costs,” said EBRD Chief Economist Beata Javorcik in an interview with Reuters.
Although energy prices have eased since the peak following Russia’s invasion of Ukraine in 2022, gas prices in Europe remain five times higher than in the United States, the report noted. The EBRD also revised down its 2025 growth forecast for Ukraine to 4.7%, citing the ongoing attacks on the country’s energy infrastructure, while predicting 3% growth for this year.
Conversely, Russia’s economy saw unexpected growth, expanding by 4.7% in the first half of 2024. This was largely driven by a surge in oil export prices, which rose by over 10% year-on-year. Moreover, discounts paid by importers of Russian oil have disappeared, casting doubt on the effectiveness of the West’s price cap, the EBRD warned.
