Inflation averages at 14.3% in EBRD regions in Mar 2023

The European Bank for Reconstruction and Development (EBRD) has warned that high inflation and tighter financing conditions, fuelled by soaring gas prices, are hindering growth across emerging Europe and beyond. As of March, inflation still averaged 14.3 per cent across EBRD regions, though it may have started to decline with moderating energy prices.

The EBRD’s regions, spanning three continents, are now projected to grow by 2.2 per cent in 2023, a slight decrease from February’s prediction of 2.3 per cent. However, growth is expected to pick up in 2024, reaching 3.4 per cent, as inflationary pressures begin to ease, according to the latest Regional Economic Prospects forecast by the EBRD.

The EBRD reports that high inflation and tighter financing, driven by rising gas prices, are slowing growth in emerging Europe and beyond.
The bank also predicts a 2.2 per cent growth across its regions in 2023, but anticipates a recovery to 3.4 per cent in 2024.
Regional growth projections differ, with Central Asia expected to remain robust.

The downward adjustment for 2023 is attributed to various elements, such as the economic aftermath of earthquakes in Turkiye, an expected credit squeeze later in the year, postponed reforms in the southern and eastern Mediterranean, along with the influence of modest growth in developed economies, ongoing inflation, and more restrictive financing circumstances in Central Europe and the Baltic States.

Before the outbreak of Russia’s conflict with Ukraine, the growth rate in 2022 had already fallen to 3.3 per cent from 7.2 per cent in the previous year, 2021. The year started strong due to the post-COVID rebound, but it was followed by two consecutive quarters of negative growth, marking the fourth technical recession for the EBRD regions since the mid-1990s.

Growth predictions vary across regions. Central Asia is expected to maintain strong growth, while central Europe and the Baltic states anticipate modest growth. Eastern Europe and the Caucasus (excluding Ukraine) also expect a deceleration in growth. Ukraine’s economy is expected to experience modest growth, with a 1 per cent increase in 2023 and a 3 per cent rise in 2024, as businesses adjust to the conditions of war.

South-eastern EU economies see their growth forecasts for 2023 revised up, while growth in the southern and eastern Mediterranean is expected to be 3.6 per cent in 2023 and 4.4 per cent in 2024. Turkiye’s growth is expected to slow due to the impact of the February 2023 earthquakes and expected credit tightening.

The Western Balkans anticipate a growth rate of 2.2 per cent in 2023 amid inflationary pressures and a subdued outlook for the advanced economies in Europe, before increasing to 3.4 per cent in 2024.

“Inflation may be on a downward trajectory, but it is still in double digits in more than three-quarters of the countries where we work. We are also seeing lots of evidence that households in the EBRD regions are feeling the pinch, having had to struggle with two recessions, one immediately after the other,” said Beata Javorcik, the EBRD’s chief economist.

Fibre2Fashion News Desk (NB)