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At the same time, the development bank warns of soaring inflation in the region, exacerbated by the disruption caused by the war and related sanctions on international energy and food markets.
While it is the expected deep contraction in Ukraine that is mainly dragging down the headline figures, a number of economies across the region have also had their projections lowered, as the effects of the war spread.
The EBRD has lowered its forecast for Ukraine this year to a contraction of 30%, down from a 20% contraction projected in March. It has held its forecast for Russia steady at a 10% contraction.
“Only last November we were predicting growth of 3.8% across our regions for this year. But at the time we described last year’s recovery and its momentum into 2022 as bitter sweet, tainted by worries over high commodity prices,” says EBRD chief economist Beata Javorcik.
“The situation now is more concerning still, with new rises in food and energy prices, driven by Russia’s war on Ukraine, further stoking inflation.”
A recovery in growth to 4.7% is expected in 2023, which is 0.3 pp down compared to the March forecasts. This is still considerably slower than the 6.7% growth recorded in 2021.
16 GEORGIA Country Report September 2022 www.intellinews.com