The EBRD operates in about 40 economies, from Mongolia to Slovenia and Tunisia. Most of them are dependent on Russian gas and a sudden halt in deliveries would reduce GDP by 2.3% this year and by 2% next year, according to the latest report from the international financial institution, notes Agerpres.
“Europe is discussing stopping oil purchases from Russia. There is also a possibility that Russia may stop gas supplies,” EBRD chief economist Beata Javorcik told Reuters.
The EBRD estimates that the economies of the region in which it operates grew by 6.7% last year, after a contraction of 2.5% in 2020, when the pandemic significantly affected the world economy and financial markets.
Stopping Russian gas exports would be the biggest blow to EU economies with significant gas imports from Russia and a high dependence on gas in their energy mix, such as the Czech Republic, Hungary and Slovakia, the European Bank for Reconstruction warned. Development.
A sudden shutdown is not the EBRD’s baseline scenario, which expects gas supplies to continue. Even so, the growth of the economy will now be much lower than that estimated by the EBRD in March 2022. The economies in the region where the EBRD operates are expected to advance by 1.1% this year, compared to an increase of 1, 7% forecast in March 2022, mainly due to the forecast decline in Ukraine.
As a result of price pressures, the economies of the EBRD region are expected to advance by 4.7% next year, compared to a 5% expansion forecast in March 2022.
“Recent increases in energy and food prices are in addition to inflationary pressures, which are already rising following the recovery in global demand, following the lifting of restrictions,” the international financial institution said in a report.
The average inflation rate in the economies of the EBRD region reached 11.9% in March 2022, a level recorded at the end of 2008.
Ukraine is expected to see a 30% decline in the economy in 2022, compared to a 20% decline forecast in March 2022. Russia’s GDP is expected to contract by 10% this year and stagnate next year.
Turkey, the largest beneficiary of EBRD funds, is expected to grow by 2% in 2022 and 3.5% in 2023.
The European Bank for Reconstruction and Development (EBRD) was established in 1991 to invest in the former communist bloc states and help them make the transition to a market economy. In recent years, the EBRD has begun to shift its focus from the former Soviet bloc to North Africa and the Middle East.
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