EBRD lowers 2026 growth forecast for its regions to 2.5%

The European Bank for Reconstruction and Development (EBRD) lowered its 2026 growth forecast for its regions by 0.6 percentage points to 2.5% because of a deep recession in Iraq and tighter financing conditions.

Economic growth across the EBRD regions accelerated to 3.4% in 2025 from 3.1% in 2024 before slowing to an estimated 2.4% in the first half of 2026.

"Excluding Iraq, this year’s forecast has been revised down by 0.1 percentage point, reflecting tighter financing conditions, the impact of drought in Europe and the Black Sea shipping blockade, while the outlook for 2027 is unchanged," the bank said, adding that collapsed oil exports reflected a deep recession in Iraq.

The institution projected the growth rate to rebound to 4% in 2027.

Average inflation across the regions stabilized at about 6% after peaking at 6.7% in April 2026.

Energy costs accounted for approximately a quarter of the headline inflation rate.

Oil prices climbed from around $65 a barrel before the conflict in the Middle East to more than $100 by April 2026, as seaborne crude exports from the region halved, the bank reminded.

The bank noted that oil prices remained 30% to 60% above their pre-conflict levels.