EBRD hints at likely growth downgrade as Egypt ranks as its fourth most war vulnerable regions

Egypt ranks fourth among most vulnerable EBRD regions to the war on Iran, with impacts felt through a combination of surging energy prices, disrupted trade, and a debt-servicing burden increasing fiscal pressure, according to a new research note (pdf) from the European Bank for Reconstruction and Development (EBRD). The country was behind only Lebanon in first place, Jordan, and Iraq.

The war is beginning to filter down to revised-down growth forecasts, with a welcome flurry of improved GDP growth predictions in recent months coming to an abrupt halt. For its part, the EBRD cautions that the “growth forecast for the EBRD regions is likely to be revised down by up to 0.4 percentage points” in its June update if energy prices were to remain elevated.

The country’s position as a net energy exporter is proving punishing to the wallet, with Brent crude surpassing USD 100 / bbl and LNG witnessing significant price increases. But this won’t just be felt in the state’s energy import bill or at the pump, with the report warning that knock-on effects from this if prices remain high and disruptions to metals and chemicals potentially leading to a more than 1.5 percentage point increase in global inflation.

Why this matters: For net-energy importers like Egypt, the real concern is that this war and energy disruptions will drag on for months. The price of oil “might reach USD 180 per barrel if Gulf oil remains largely off-market” and the region’s importance in the LNG trade should lead to similar increases for this energy source that Egypt has increasingly relied on in recent years to bridge the gap between the supply and demand, further pushing up the country’s energy import bill.

But even with a welcome quick end to the war, gas prices are still expected to remain high as “as European and Asian buyers scramble to refill storage while LNG production takes weeks to restart,” according to the report. A lot also depends on how damaged energy infrastructure in the region is when the war ends and how long it takes to first repair and then restart operations — a particularly lengthy process for LNG facilities.

The steady increase in remittances we’ve been seeing could also be negatively affected — but it’s too early to tell. Although “remittance flows tend to remain stable in times of crises,” the longer-term concern is that “prolonged conflict could reduce demand for foreign labour in the GCC economies.” Remittances, which rose 40.5% y-o-y to USD 41.5 bn in 2025, have become an increasingly part of the country’s hard currency inflows that helped counter the drop off in Suez Canal revenues in 2023.