Emerging Market Growth Slows Amid War Pressures and Supply Chain Disruptions
The European Bank for Reconstruction and Development (EBRD) has downgraded its growth forecast for emerging market economies, citing multiple pressure points including high energy prices, rising borrowing costs, and supply chain disruptions.
The EBRD expects growth of 2.5% this year, a 0.6 percentage point decrease from its June forecast. The sharpest downgrades were for Iraq and Lebanon, with the EBRD predicting a 12% contraction in Iraq's economy due to the closure of the Strait of Hormuz.
Ukraine's economy is also expected to suffer due to intensifying Russian attacks, while Türkiye's growth is being held back by persistent inflation pressures. The EBRD noted that energy prices account for around a quarter of global headline inflation.
The report also highlighted the impact of wheat price increases on emerging markets, particularly those reliant on imports. Global wheat prices have risen around 30% since February due to attacks on Ukrainian exports.