BAKU, Azerbaijan, February 27. Economic growth
in the southern and eastern Mediterranean (SEMED) region is
projected to accelerate from 2.5 percent in 2024 to 3.7 percent in
2025 and 4.1 percent in 2026, according to the latest Regional
Economic Prospects report by the European Bank for Reconstruction
and Development (EBRD), Trend reports.
The recovery began in late 2024 following a period of subdued
expansion, largely due to regional instability and a sharp economic
contraction in Lebanon amid its conflict with Israel. However,
while the outlook for the next two years is positive, the report
warns of significant downside risks, including the potential for
renewed conflicts, uncertainties in foreign aid and tariff
policies, and climate-related shocks.
The report, titled Weaker Momentum Amid Fragmenting Trade and
Investment, highlights global economic challenges, particularly the
divergence between advanced European economies and the United
States. It notes growing concerns over potential tariff increases
on US imports and possible retaliatory measures from trading
partners, which could dampen investment, disrupt supply chains, and
weaken production.
The report outlines a scenario in which a universal
10-percentage-point increase in US import tariffs could lower GDP
in EBRD regions by 0.1 to 0.2 percent in the short term. Among the
most vulnerable economies are Hungary, Jordan, Lithuania, and
Slovakia, due to their trade exposure to the US. Meanwhile,
Bulgaria, Romania, and Slovenia are particularly susceptible to
newly announced US tariffs on steel and aluminum.
Despite these risks, the EBRD remains optimistic about the SEMED
region’s ability to sustain growth, provided that geopolitical
stability improves and economic reforms continue.
