EBRD forecasts a slowdown in economic growth in the South and East of Mediterranean

European Bank for Reconstruction and Development said the SEMED region is expected to experience a slowdown in economic growth of 2.5% due to the war in Ukraine.

In its latest Regional Outlook Report (ROR), the European Bank for Reconstruction and Development (EBRD) foresees a strong impact of the war in Ukraine on the Southern and Eastern Mediterranean (SEMED) region.

Published on Tuesday 10 May 2022, this study envisages a slowdown in economic growth to 2.5% in this group of countries. The conflict “will be felt mainly through higher oil and food prices for consumers, as well as through secondary effects on budgets, food security, and growth drivers in the medium term,” the EBRD said.

All countries in the SEMED region remain dependent on oil imports. Egypt, Tunisia, and Jordan are also dependent on food imports. Tourism, a very important sector of GDP, is also expected to be affected by the war in Ukraine with a “likely negative impact on some of them”.

However, the EBRD stresses that “new opportunities may arise for investment in renewable energy”, thanks to the potential in the region.

The EBRD is moderating its forecasts for Tunisia with an outlook of 2% in 2022. Here again, the war in Ukraine and rising oil and wheat prices will affect households and the public budget. Added to this is uncertainty about the economic recovery, which “will depend on progress under a new program supported by the International Monetary Fund (IMF) that would provide much-needed external financing and technical assistance,” the report says.

The EBRD also said that this aid would give the government more room to impose reforms that are controversial with the trade unions and part of the population, but essential, such as the reduction of the public sector wage bill and the reform of subsidies.


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