Middle East War Drives Up Energy Costs, EBRD Downgrades European Economic Outlook
The European Bank for Reconstruction and Development (EBRD) has downgraded its economic growth forecast, stating that the energy price shock from the Middle East war is having a significantly greater negative impact on Europe than on the United States. European natural gas prices are five times higher than in the US, and the gap is widening, with electricity prices also far exceeding those in the US. The EBRD predicts GDP growth in its regions will slow from 3.4% in 2025 to 3.1% in 2026, a 0.5 percentage point downgrade from its February forecast. The largest downward revisions are in the southeastern Mediterranean region, including Egypt, Iraq, Jordan, and Lebanon, where Lebanon's economy is expected to contract by 2% this year.
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- 📰 Published: June 3, 2026 at 16:13
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(Central News Agency, London, 3rd, Comprehensive Foreign News) The European Bank for Reconstruction and Development (EBRD) on Tuesday downgraded its economic growth forecast, stating that the energy price shock from the Middle East war is having a significantly greater negative impact on Europe than on the United States.
According to an AFP report, the London-based EBRD noted that European natural gas prices are five times higher than those in the United States, and the gap is widening, with electricity prices also far exceeding those in the US.
The EBRD stated that Europe is more dependent on hydrocarbon imports than the US, making it more vulnerable to energy price fluctuations.
In its report, the EBRD forecast that GDP growth in its regions of operation will slow from 3.4% in 2025 to 3.1% in 2026, a 0.5 percentage point downgrade from its February forecast.
EBRD Chief Economist Beata Javorcik said in a statement that the Middle East conflict is delivering a new shock to a region already facing manufacturing weakness and fiscal pressures, with rising energy costs eroding competitiveness, fueling inflation, and tightening fiscal space.
The EBRD said the largest downward revisions to growth forecasts are in the southeastern Mediterranean region, including Egypt, Iraq, Jordan, and Lebanon.
According to the forecast, Lebanon's economy will contract by 2% this year, a stark contrast to the 4% growth expected in February, but could rebound next year if peace is restored. (Editor: Liu Wenyu) 1150603
According to an AFP report, the London-based EBRD noted that European natural gas prices are five times higher than those in the United States, and the gap is widening, with electricity prices also far exceeding those in the US.
The EBRD stated that Europe is more dependent on hydrocarbon imports than the US, making it more vulnerable to energy price fluctuations.
In its report, the EBRD forecast that GDP growth in its regions of operation will slow from 3.4% in 2025 to 3.1% in 2026, a 0.5 percentage point downgrade from its February forecast.
EBRD Chief Economist Beata Javorcik said in a statement that the Middle East conflict is delivering a new shock to a region already facing manufacturing weakness and fiscal pressures, with rising energy costs eroding competitiveness, fueling inflation, and tightening fiscal space.
The EBRD said the largest downward revisions to growth forecasts are in the southeastern Mediterranean region, including Egypt, Iraq, Jordan, and Lebanon.
According to the forecast, Lebanon's economy will contract by 2% this year, a stark contrast to the 4% growth expected in February, but could rebound next year if peace is restored. (Editor: Liu Wenyu) 1150603