By Mucahithan Avcioglu
ISTANBUL (AA)—The European Bank for Reconstruction and Development (EBRD) reported Thursday that it expects a 3.1% growth in 2025 and 3.3% next year amid pressures from geopolitical tensions, US tariffs, competition from China, and limited fiscal space.
The new economic growth projection for this is 0.1 percentage point higher than the previous forecast, while the forecast for 2026 is 0.1 percentage point lower.
"While overall revisions are modest, they mark a growing divergence in growth trajectories between emerging Europe – where downward revisions reflect weak external demand, the need for fiscal consolidation and the impact of higher tariffs set by the US – and the rest of the EBRD regions," the bank said in a statement.
The bank stated that a factor is the rise in US tariffs. In the first half of 2025, the average effective US tariff on imports from the EBRD areas increased from 1.4% in the first half of 2024 to 4%.
"Consequently, US imports from Jordan, Slovenia and Tunisia have declined, while those from Hungary and Kazakhstan have increased, as have US imports of computers, phones, machinery and gold, likely reflecting the front-loading of imports ahead of future tariff hikes," it said.
Meanwhile, China is becoming more competitive in exporting manufactured goods. From less than 10% in 2000 to 25% in 2024, China now accounts for a larger portion of global manufacturing exports than both the US and Germany combined.
The bank also noted that as China’s exports have diversified, it now increasingly competes with emerging Europe and Türkiye in manufacturing, while its imports are more complementary to the exports of commodity-producing economies.
It also warned of ongoing financial risks. Numerous economies in the EBRD regions—most notably Egypt, Jordan, and Ukraine, as well as Ghana, Kenya, and Senegal—continue to struggle with high levels of public debt and high government interest payments relative to the gross domestic product (GDP).
Regionally, the largest economic growth is expected in Central Asia, with 6.2% this year and 5.2% in 2026, while the lowest growth is expected in the Southeastern EU, with 1.7% this year and 1.9% in 2026.
For Türkiye, the bank estimates a growth rate of 3.1% for this year and 3.5% for next year, driven by strong domestic demand. The 2025 figure is 0.3 percentage points higher than the previous estimate, while the figure for next year is 0.7 percentage points higher.