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The European Bank for Reconstruction and Development (EBRD) has cut our growth forecast for 2024 to 3.9%, down 0.6 percentage points from its September forecast, it said in its latest Regional Economic Prospects report (pdf).
Projections for the current fiscal year took a big hit: The EBRD cut its growth forecast for the current fiscal year by 1.8 percentage points to 3.0%.
It’s not all bad news: The bank also published its first forecast for 2025, anticipating growth to pick up to 4.4% for the calendar year. Likewise, the bank expects growth to pick up to 4.0% in its first forecast for the coming fiscal year.
The rationale: The bank highlighted FX shortages and “reform uncertainty” as factors weighing on the economic outlook. “High interest rates and persistently high inflation” as well as “further escalation of tensions in the Middle East endangering investor confidence, tourism and trade flows” were also singled out as factors dampening growth expectations.
The bank’s projections for the current fiscal year are still more optimistic than most: The EBRD’s new forecast for the current fiscal year is above the World Bank’s forecast of 2.8% and is even more optimistic than the Madbouly government’s most recent forecast of the economy growing at a 2.9% clip. The IMF is in agreement with the EBRD, with both projecting 3.0% growth throughout the year ending June 2024.
But, the EBRD is more pessimistic about the coming fiscal year: Despite being more optimistic than the government and other international lenders about the current fiscal year, the bank’s 4.0% projection for the coming fiscal year is below the government and World Bank’s forecasts of 4.2% and the IMF’s growth projection of 4.4%.
THE REGIONAL OUTLOOK- The SEMED region — which spans developing countries in the southern and eastern Mediterranean, emerging Europe, and central Asia — is now looking at 3.4% growth for 2024, down 0.5 percentage points from previous forecasts. This was triggered by the slowdown in Egypt as well as that in Lebanon and Tunisia, which saw their growth forecasts slashed 2.8 percentage points and 0.6 percentage points, respectively.
