Shocking expectations from the European Development Bank for the economy of 3 countries

The European Bank for Reconstruction and Development revealed its expectations regarding the economy of many countries, including Russia, and Ukraine.

In general, the economies of the countries where the European Bank for Reconstruction and Development is present are expected to grow by 2.2%, according to updated data from the institution, which previously expected growth by 2.3%.

Russian economy

The European Bank revealed that the Russian economy will shrink less than expected this year. 

The European Bank for Reconstruction and Development pointed to the beginning of a decline in inflation after the rise in energy prices following the Russian invasion of Ukraine, but it still averaged 14.3% in its areas of activity in March.

In Russia, the economy contracted by 2.1% last year, less than expected, and is expected to contract again by 1.5% this year according to updated forecasts.

Russia benefited from higher-than-expected oil revenues thanks to the redirection of its exports to other countries to compensate for its decline in Eastern Europe. Economic growth in Russia is expected to return to 1% next year.

Turkish economy

Turkish economy will suffer more than expected from the February 6th earthquake.

It is expected that Turkey will register a growth of 2.5% in 2023, after registering a growth of 5.6% in 2022, mainly driven by an "unconventional" monetary policy that includes the reduction of interest despite the rise of inflation to 85% in one year in the previous October to decrease recently to 50%.

The expected growth rate decreased by half a percentage point compared to the previous expectations in February due to the impact of the devastating earthquake.

The damage of the earthquake exceeds 100 billion dollars according to the bank's estimates, which believes that the reconstruction efforts will push the growth in 2024 to reach 3%.

The chief economist at the European Bank for Reconstruction and Development Beata Yaforcik said that "in recent years, Turkey has prioritized growth over the stability of the overall economy. There is a limit to how long the basic laws of the economy can be ignored."

She added that while Turkey is heading towards a second round of its presidential elections, "regardless of who wins, difficult choices await the next government."

Ukraine to achieve 3% growth

In Ukraine, the economy is expected to grow by 1% this year, after an unprecedented 29% collapse in GDP in 2022 as the Russian invasion begins.

The report stated that "the producers have to deal with the frequent power outages, the damage to their facilities and infrastructure, the logistical difficulties, the lack of workers, and the occasional air raids."

Despite this, the stability of the Ukrainian macroeconomics was maintained through the long-term financing and the International Monetary Fund program.

The European Bank for Reconstruction and Development expects Ukraine to achieve 3% growth next year despite strong doubts about the course of the conflict.