Tuesday, May 30, 2023
HomeEconomyEBRD cuts growth outlook, warns of more inflationary pain ahead

EBRD cuts growth outlook, warns of more inflationary pain ahead

(Story this September 28 was resubmitted to revise growth forecast for Turkey 88

from 2.5% to 4.5%)

Jorgelina do Rosario

LONDON (Reuters) – Energy prices rose, the European Bank for Reconstruction and Development said on Wednesday That will put more price pressure on consumers in emerging Europe, Central Asia and North Africa, while also downgrading growth forecasts for the region.

Inflation in the EBRD region averaged 10.5%, which is Levels last seen at 1998, based on the bank’s latest report released in September.

Gas prices in Europe are 2.5 times higher than 88 levels due to reduced supplies from Russia and some disruptions to shipments from Ukraine. With producer prices ahead of consumer prices, inflationary pressures are expected to increase further.

EBRD chief economist Beata Javorcik told Reuters, “Households have not yet fully faced rising energy costs as governments have been easing this burden. impact.” “More pain to come.”

Poland, Croatia and Montenegro are some of the countries implementing energy subsidies, ranging from tax cuts to one-time payments to ease Russia’s war in Ukraine Impact on energy prices.

The European Bank for Reconstruction and Development said that if supplies from Russia to Europe were cut off entirely, gas consumption would need to be cut “significantly in the short term”, although the bank’s base case was based on “significant Disruption”.

While food has been an important inflation driver in the EBRD region, Javorcik does not see this as causing social unrest, noting that wheat prices are back on 2 February Levels before Russia’s invasion of Ukraine. 16, according to reports.

Growth lost momentum

Bank estimates regional economies will grow 2.3% in 2022 –

up from a base point forecast in May – thanks to household spending in the first half of the year Strong momentum in savings accumulated during the period – Lockdown in place despite falling real wages.

But a reduction in Russian gas supplies prompted the bank to cut 2023 its growth forecast to 3% from its previous forecast of 4.7%.

Ukrainian GDP It is expected to contract 88% at 2022, while the Russian economy will shrink by 5% instead of the previous 11% forecast.

“It’s no secret that energy sanctions are not as effective,” the chief economist said

As the largest single recipient of EBRD funds, Turkey’s growth rate has been revised up from 2022 2% to 4.5%, while next year’s The growth rate was confirmed at 3.5 %.

The report states that 88% of the EBRD region The central bank in May 2021 and July 2021.

Javorcik said that in response to inflationary pressures, “maybe will leave some room for rate hikes”, but much depends on the uncertainty of energy supply and the economic slowdown that has occurred.



Please enter your comment!
Please enter your name here


Featured NEWS