EBRD Forecasts 3.1 Percent Economic Growth in 2025

(MENAFN) The European Bank for Reconstruction and Development (EBRD) announced Thursday it forecasts economic growth of 3.1% in 2025 and 3.3% in 2026, navigating challenges from geopolitical tensions, US tariffs, Chinese competition, and constrained fiscal capacity.

The latest growth projection for 2025 is up by 0.1 percentage points from the previous forecast, while the 2026 outlook has been slightly lowered by 0.1 percentage points.

"While overall revisions are modest, they mark a growing divergence in growth trajectories between emerging Europe – where downward revisions reflect weak external demand, the need for fiscal consolidation and the impact of higher tariffs set by the US – and the rest of the EBRD regions," the bank said in its statement.

A significant contributor is the rise in US tariffs. The average effective US tariff on imports from EBRD regions jumped from 1.4% in the first half of 2024 to 4% in the same period of 2025.

"Consequently, US imports from Jordan, Slovenia and Tunisia have declined, while those from Hungary and Kazakhstan have increased, as have US imports of computers, phones, machinery and gold, likely reflecting the front-loading of imports ahead of future tariff hikes," the bank added.

Meanwhile, China’s share of global manufacturing exports has surged from under 10% in 2000 to 25% in 2024, surpassing combined exports from the US and Germany.

The EBRD highlighted that China’s export diversification now positions it as a growing competitor to emerging Europe and Türkiye in manufacturing, even as its imports complement commodity-exporting economies.

Financial vulnerabilities also persist. Several economies within the EBRD’s scope—including Egypt, Jordan, Ukraine, Ghana, Kenya, and Senegal—face challenges with elevated public debt and high government interest payments relative to GDP.

Regionally, Central Asia is poised for the strongest growth at 6.2% this year and 5.2% in 2026, while Southeastern EU countries are expected to see the slowest expansion at 1.7% and 1.9%, respectively.

For Türkiye, the bank projects 3.1% growth in 2025 and 3.5% in 2026, buoyed by robust domestic demand. The 2025 forecast is 0.3 percentage points higher than previously estimated, and the 2026 figure rises by 0.7 percentage points.

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