Economies across the European Bank for Reconstruction and Development's (EBRD) regions of operation have proved resilient but face mounting pressures from energy and food markets, drought, disrupted trade and higher borrowing costs, the EBRD said on September 24, cutting its 2026 growth forecast while raising its projection for next year.
The EBRD expects growth across its regions to slow to 2.5% in 2026 from its previous forecast of 3.1%, before accelerating to 4.0% in 2027. The 2026 forecast was cut by 0.6 percentage points from June, while the 2027 forecast was raised by 0.4 points.
"Our region has been resilient but pressures are mounting on multiple levels - from climate affecting water levels, through access to hydrocarbons, through the Black Sea blockade and food markets to the cost of borrowing," Beata Javorcik, the EBRD's chief economist, told IntelliNews.
The bank's latest Regional Economic Prospects report, ntitled "Running dry", said tighter financing conditions, drought and the disruption to Black Sea shipping were weighing on the outlook, alongside higher energy and food prices.
Javorcik said the disruption to Ukraine's exports had become particularly acute, with the Black Sea corridor almost closed as attacks on ports and vessels intensified.
"The eyes of the world are focussed on the Strait of Hormuz, but the Black Sea corridor is essentially almost closed, and the same tactic used in the Middle East of hitting ports and vessels is being employed," she said.
Ukraine's grain and oilseed exports fell by more than half in August, Javorcik said, while an alternative route through the Danube faced constraints.
"Exports worth $5bn-5.5bn may be affected, equivalent to 2.5% of Ukraine’s GDP," she said.
The EBRD said Russia and Ukraine together account for about a quarter of global wheat exports. Wheat prices have risen by more than a third and are expected to remain elevated through 2028, while higher fertiliser prices are likely to feed more fully into farm costs next year.
Low water levels on the Danube have further restricted Ukraine's ability to reroute exports. Drought has also hit central Europe and the Baltic states, with 38% of land at medium or high agricultural drought risk in 2026, compared with an average of 12% since 2010, the report said.
Javorcik also highlighted growing pressure on hydrocarbon supplies. In Europe, natural gas prices have risen as attacks on energy infrastructure in the Middle East have disrupted supplies, while U.S. gas prices have remained broadly flat.
"In Europe the main pressure point is prices of natural gas. The bombing of Qatari infrastructure means there has been an uptick in prices of natural gas paid by Europe, while American prices remained flat," she said.
Gas prices have risen more than 70% since February, according to the EBRD, while global seaborne liquefied natural gas exports have fallen 40% as Middle Eastern cargoes have largely stopped.
European Union gas storage was only 65% full in August, the lowest level for that month in 15 years, and the bank said inventories were unlikely to reach the 90% pre-winter target at the current rate of injections.
The impact of higher energy costs varies across the EBRD regions. Bosnia & Herzegovina, North Macedonia and Moldova face some of the largest increases in import bills because of their dependence on imported energy and indirect exposure to Middle Eastern oil-product supply chains.
Central Asian economies face a different vulnerability because of their dependence on Russian refined fuels. "In Central Asia, the Kyrgyz Republic, Mongolia and Tajikistan import more than 90% of their gasoline and diesel from Russia, so they are feeling the implications of Ukrainian attacks on Russian refineries," Javorcik said. "What’s unusual about these countries is that they are very reliant on road transport."
Oil prices rose from around $65 a barrel before the conflict in the Middle East to above $100 in April, the EBRD said. Prices remain 30% to 60% above their pre-conflict levels, while refined products such as diesel and jet fuel have recorded larger increases than crude.
The report also identified competition for global savings as a growing constraint on investment and government finances.
"Globally we have moved from a savings glut to a world of competition for funds, driven by the AI boom," Javorcik said. "One estimate for investments in AI data centres is $2.8 trillion by 2030, equivalent to Italian GDP this year."
She said US companies were competing with governments for available savings, while central banks were responding to persistent inflation with higher interest rates, increasing borrowing costs.
National saving rates in advanced economies have fallen, the EBRD said, while government deficits and corporate borrowing for artificial intelligence investment have pushed longer-term interest rates higher. Government bond yields across most EBRD economies have risen alongside those in advanced economies.
Average inflation in the EBRD regions has stabilised at around 6%, after reaching 6.7% in April, but remains about two percentage points above its pre-pandemic average.
The EBRD expects growth in Central Europe and the Baltic states to reach 2.9% this year before slowing to 2.5% in 2027, while growth in the Western Balkans is forecast at 3.0% and 3.5%, respectively.
Southeastern EU economies are expected to grow just 0.5% in 2026, before accelerating to 2.0% next year, with Romania's contraction weighing on the region. Central Asia is expected to remain the fastest-growing EBRD region, at 5.8% this year and 5.3% in 2027.
Growth in Eastern Europe and the Caucasus is forecast at 2.5% this year and 3.1% next year, while Turkey is expected to expand 3.0% and 4.0%, respectively.
The southern and eastern Mediterranean region is forecast to contract 0.7% this year before rebounding 7.1% in 2027, largely because of an expected recovery in Iraq's oil exports. Excluding Iraq, growth is projected at 3.9% in 2026 and 4.3% in 2027.
The EBRD said high energy costs were also weighing on European industry, with companies in the EU paying around 2.4 times US electricity prices, encouraging a shift away from energy-intensive production.
It said reducing dependence on gas would require further investment in renewable energy, storage and nuclear power, while strengthening water resilience would become increasingly important for agriculture, industry and energy generation.
Trade conditions have eased somewhat following changes to US tariffs in July, which reduced the average statutory tariff on imports from EBRD economies to 8.6% from 11.6%. But frequent changes to tariff regimes have kept trade-policy uncertainty elevated, the bank said.
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