European Bank cuts GDP growth forecast for 2024

ANKARA   -  The European Bank for Reconstruction and Development (EBRD) on Wednesday lowered its growth forecast for 2024 in its regions – emerging Europe, Central Asia, and North Africa – amid geopolitical tensions. The gross domestic product (GDP) of the EBRD regions, which cover nearly 40 economies, is projected to grow 3 percent this year, down 0.2 percentage points from its September forecast, the bank said in a report.

This downward revision was partly due to slower-thanexpected growth in early 2024 across central Europe and the Baltic states, echoing Germany’s sluggish economic performance, it noted. “Economic activity in the southern and eastern Mediterranean is expected to be weaker than previously projected because of spillovers from the war in Gaza and structural challenges and slow reform progress in Egypt while intermediated trade in Central Asia appears to have leveled off and is expected to make a more modest contribution to growth than in the past two years,” it said. Economic growth in the EBRD region is foreseen to accelerate further next year to 3.6 percent. Beata Javorcik, the EBRD’s chief economist, warned that the escalation of geopolitical tensions and its economic fallout pose a risk to the outlook.

“While the current shifts in trade and investment relationships may benefit some individual economies, let’s not forget that globally, geopolitical fragmentation leads to inefficiencies and higher volatility,” Javorcik noted. Since February 2022, arms trade as a share of imports and exports of the EU economies in the EBRD regions rose from 0.1 percent to 0.3- 0.5 percent, the bank added.

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