Economic Growth Edges Higher for EBRD Countries but Tariff Threat Looms

• The European Bank for Reconstruction and Development lifted its 2025 growth forecast for the first time in more than a year but warned that the effects of tariffs and war will weigh on growth in 2026.
• The report, which covers economies in emerging Europe, Central Asia, the Middle East and Africa, raised the 2025 growth outlook slightly to 3.1%, but noted a growing divergence as emerging European countries' growth lagged expansion elsewhere.
• The latest report, EBRD chief economist Beata Javorcik told Reuters, showed "a story of multiple pressure points, and a story of divergence in performance between emerging Europe and our other regions of operations."
• Rising debt, resurgent inflation, prolonged wars and tariffs were menacing all EBRD economies, Javorcik warned. And while U.S. imports from those countries had grown in the first half of the year, that was driven by the first quarter, before tariffs hit. "Going forward, we are going to see the impact of tariffs biting," she said.
• Debt and the need to cut spending are weighing on growth in EBRD's European countries, including Poland, Hungary and Romania, while countries in Central Asia, Sub-Saharan Africa and Turkey are pegged for faster growth. However, Javorcik said debt payments as a percentage of GDP are rising in most countries, casting a shadow over the long-term sustainability of public finances.

(Source: Reuters)