EBRD predicts economic slowdown - Influencing factors are weak demand and trade uncertainty
The European Bank for Reconstruction and Development (EBRD) has lowered its regional economic forecast for 2025 by 0.3 percentage points, compared to its September 2024 outlook. Growth across all economies where the Bank invests is now expected to average 3.2 percent this year, before rising to 3.4 percent in 2026, according to its latest Regional Economic Outlook report.
This downward revision stems mainly from weaker external demand in Central Europe, the Baltic States and the south-eastern EU countries. It also reflects the continuing impact of conflicts and the slow pace of reforms in the southern and eastern Mediterranean region.
Ukraine entered 2025 facing weaker economic performance and rising inflation. The bank has revised down its forecast for the country this year as Russian attacks on electricity infrastructure continue to hamper production. Ukraine’s GDP growth is expected to reach 3.5 percent in 2025, before strengthening to 5.0 percent in 2026, assuming a ceasefire takes effect by the end of 2025.
The new report, titled "The Weakest Moment in Fragmented Trade and Investment," highlights the low momentum of global growth and a persistent gap between the performance of advanced European economies and that of the United States.
It cites uncertainty about possible tariff increases on U.S. imports and retaliatory measures from trading partners. According to the report, trade uncertainty alone is enough to discourage investment, weaken production, and disrupt global supply chains. Looking beyond the uncertainty, the short-term impact of tariffs and trade restrictions on individual economies will depend on whether the tariffs are applied universally or only to selected partners.
A scenario in which the United States raises tariffs on all imports by an additional 10 percentage points could reduce GDP in the EBRD regions by 0.1-0.2 percentage points in the short term. Jordan, the Slovak Republic, Hungary and Lithuania are among the EBRD economies most vulnerable to such measures due to their overall trade exposure to the US market. The report also shows that Bulgaria, Slovenia and Romania are most exposed to tariffs on steel and aluminium.
Economic analysis also shows that if tariffs are applied selectively, economies with privileged access to the US market could benefit from trade diversion and increased foreign direct investment (FDI).
Geopolitical tensions have led to a sharp decline in trade and FDI between rival geopolitical blocs, centered around the US-led West and the China/Russia-led East. At the same time, foreign investment from China and the United States in “connector” economies such as Uzbekistan, Vietnam, Mexico, the United Arab Emirates and Saudi Arabia has increased, the report notes.
The EBRD notes that regional inflation has fallen from a peak of 17.5 percent in October 2022 to 5.9 percent in December 2024. However, the inflation rate remains more than 1 percentage point above its pre-pandemic average, with price pressures increasingly driven by demand factors, such as fiscal policies and rapid wage growth.
Although the easing in inflation has been largely in line with expectations, the report notes that interest rates, including those in the United States, have fallen more slowly than expected.
Poll
AMF: Life insurance revenues, increase by about 11.4% in January 2025!
The Financial Supervisory Authority announced through its latest published report that income from gross written insurance premiums for January 2025 amounted......
Over 19 billion euros in losses - Bundesbank records worst result in history
Germany's central bank suffered a record loss of 19.2 billion euros last year, marking the latest setback for Europe's largest economy. A bond-buying plan......
A step closer to the European innovation ecosystem - From funding to mobility. EIT, support for innovation in Albania
EIT, the European Institute of Innovation and Technology, part of Horizon Europe, held an "Info Day" related to EIT for the University of Tirana, which......
Hoxha: 520 thousand citizens abroad benefit from the extension of the validity of identification documents!
The Minister of Interior, Ervin Hoxha, presented today at the plenary session of the Parliament the normative acts of the Council of Ministers that aim to......
How will investments in coastal areas be carried out? - New criteria/ Whoever "injects" over 50 million euros in Albania, receives status
Investors who want to inject more than 50 million euros into the Albanian economy benefit from the special status of "strategic investor", even though the......
"Migrants will bring less money in 2025" EBRD: Economic growth only 3.7%. Tourism also performs worse
The Albanian economy is expected to grow by 3.7% this year. This is the European Bank for Reconstruction and Development's (EBRD) February 2025 forecast for......
50 million euros in EU aid for energy - Government approves multi-year program, promoting renewable energy and efficiency
The government has approved in principle the financing agreement with the European Commission for the multiannual operational program for energy for the......
Years of work before '94 are known, how to apply for pension? - Calculation/Benefit for individuals according to the companies where they worked
Over 30 thousand citizens will have their employment period before 1994 recognized, without the need to initiate legal proceedings due to damage to......
