EBRD Cuts 2026 Growth Forecast on Iraq Recession, Tighter Credit
The downgrade follows a period of acceleration: growth across EBRD regions climbed to 3.4% in 2025, up from 3.1% in 2024, before losing momentum and slowing to an estimated 2.4% in the first half of 2026.
"Excluding Iraq, this year's forecast has been revised down by 0.1 percentage point, reflecting tighter financing conditions, the impact of drought in Europe and the Black Sea shipping blockade, while the outlook for 2027 is unchanged," the bank said, attributing Iraq's steep slowdown to a collapse in oil exports.
Despite the near-term downgrade, the EBRD projects growth will bounce back to 4% in 2027.
On the inflation front, the bank said average price growth across its regions has stabilized at roughly 6%, easing from a peak of 6.7% in April 2026. Energy costs made up about a quarter of that headline inflation figure.
The bank pointed to sharp swings in oil markets as a key driver: crude prices jumped from around $65 a barrel before the Middle East conflict to more than $100 by April 2026, as seaborne crude exports from the region were cut roughly in half. Prices have since eased but remain elevated, the bank noted, sitting 30% to 60% above pre-conflict levels.
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