High gas prices and inflation dampen growth in EBRD regions

High gas prices and persistent inflation continue to weigh on the economic outlook, the European Bank for Reconstruction and Development (EBRD) says in an update to its Regional Economic Prospects forecasts.

Output in the Bank’s regions, which stretch across three continents from North Africa to Central Asia and includes the countries of the Eastern Partnership, is now expected to grow by 2.1 per cent in 2023, down from the 3.0 percent predicted in its last report in September. Growth forecasts have been adjusted downwards in more than half of the 36 economies in which the EBRD works, with very few upward revisions.

Among the individual EBRD economies and regions, the Bank forecasts a rise in Ukraine’s GDP of 1 per cent this year (down from the 8 per cent forecast last September). This would amount to a stabilisation of real output at around 70 per cent of its 2021 level. The Bank’s forecast for 2024 is for 3 per cent growth.

Output in eastern Europe and the Caucasus (excluding Ukraine) exceeded expectations in 2022, driven by high growth in Armenia and Georgia. Growth is, however, expected to slow to 2.7 per cent in 2023 before accelerating moderately to 3.6 per cent in 2024 amid the waning impact of extraordinary factors related to the rerouting of trade around Russia and the inflow of capital and skilled migrants, the EBRD says.

A more comprehensive Regional Economics Prospects report will be issued in May.

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Press release