European bank raises growth forecast for 2023

ANKARA

The European Bank for Reconstruction and Development (EBRD) on Wednesday raised its growth forecast for this year in its regions – emerging Europe, Central Asia, and North Africa.

The gross domestic product (GDP) of the EBRD regions, which covers nearly 40 economies, is projected to grow 2.4% in 2023, a 0.2 percentage point upward revision compared to its May forecast, the bank said in a report.

This stemmed from large upward revisions in Türkiye and Central Asia, partially offset by a weaker growth outlook in emerging Europe, it said.

Economic growth is expected to pick up to 3.2% in 2024, as inflationary pressures gradually subside. The figure was revised downwards by 0.2 percentage point from the previous report, due to the base effect of higher growth expected in 2023.

"The robust growth of the economies of Central Asia and the weaker performance of those in central Europe and the Baltic states reflect the different consequences of energy prices, inflation and shifting patterns of trade," said Beata Javorcik, the EBRD’s chief economist.

Growth in central Europe and the Baltic states is expected to come in at 0.5% in 2023 and accelerate to 2.5% in 2024.

The GDP in Central Asia is projected to rise by 5.7% this year and 5.9% next year.

Embattled Ukraine's GDP is foreseen to rise 1% this year, reflecting a sharp year-on-year contraction in the first quarter. The war-hit economy is projected to grow 3% in 2024.

The bank projected the Russian economy to grow by 1.5% in 2023 and 1% in 2024.

GDP growth in Türkiye, the largest recipient of EBRD funds, was revised up by 0.1 percentage point to 3.5% in 2023, reflecting pre-election fiscal stimulus, though growth is expected to slow in the second half of the year.  Turkish economy is forecast to grow 3% next year.