Growth in EBRD regions remains resilient despite continued trade tensions

• Growth in the EBRD regions forecast to reach 3.6 per cent in 2026 and 3.7 per cent in 2027
• Trade tensions reshape global trade patterns but present diversification opportunities
• Inflation moderates despite expansionary fiscal policies

The European Bank for Reconstruction and Development (EBRD) expects growth across its regions to pick up from an estimated 3.4 per cent in 2025 to 3.6 per cent in 2026 and 3.7 per cent in 2027, according to its latest Regional Economic Prospects report. The forecast represents a 0.2 percentage point upward revision for 2026 relative to the outlook published in September 2025.

Entitled Resilient growth amid continued trade tensions, the new report shows that while geopolitical frictions and trade disputes remain significant, their impact on global trade has so far been less pronounced than previously anticipated. Rapid adjustments to global supply chains and rising demand for artificial intelligence (AI)-related products have helped sustain economic momentum across many EBRD economies. However, the full impact of US tariffs may not have been felt yet, as US imports were frontloaded earlier in 2025 in anticipation of tariff increases.

Growth is further sustained by continued disinflation, which is supporting consumption, and large infrastructure projects, which are boosting investment.

“Economies across the EBRD regions are proving more adaptable in the face of persistent trade tensions than many expected,” said Beata Javorcik, the EBRD’s Chief Economist.

“Supply chains are evolving rather than retreating, creating new opportunities for diversification and integration into emerging industries, including those linked to AI. Maintaining macroeconomic stability while supporting investment and productivity growth will be essential to sustaining this resilience in an increasingly fragmented global economy.”

Trade tensions between China and the United States of America continued to intensify in 2025, leading to a further decline in bilateral trade between the two economies. At the same time, both China’s total exports and exports from most economies in the EBRD regions increased relative to 2024. The United States substituted some imports previously sourced from China with imports from other economies, including selected products from the EBRD regions.

While the overall role of the EBRD economies in this reallocation remained limited, exports of precious metals, computers, phones, chocolate and several other product categories to the United States rose significantly as China’s exports of those products declined. Meanwhile, exports from China to the EBRD regions also rose, reflecting expanded production capacity and strong price competitiveness.

The report highlights the increasing diversification of export baskets in the EBRD regions. Most economies now export a wider variety of goods than two decades ago, alongside a rising share of products in which they demonstrate comparative advantage. At the same time, similarities between the export baskets of China and other economies have continued to grow.

Inflation across the EBRD regions moderated to 5.5 per cent in December 2025. Disinflation was supported by slower nominal wage growth and financing conditions characterised by positive real interest rates, even as fiscal policies in some economies remained more expansionary than previously expected.

Regional growth projections

• Central Europe and the Baltic states: Growth is expected to pick up to 2.9 per cent in 2026 from an estimated 2.6 per cent in 2025, driven by stronger investment ahead of upcoming Recovery and Resilience Facility (RRF) deadlines, before moderating to 2.7 per cent in 2027.
• South-eastern European Union (EU): After slowing in 2025, gross domestic product (GDP) growth is projected to remain at broadly the same level, reaching 1.5 per cent in 2026, as fiscal consolidation weighs on consumption in Romania. Growth is then expected to pick up to 2.3 per cent in 2027.
• Western Balkans: Growth decelerated to 2.5 per cent in 2025, reflecting a weaker-than-expected performance in Serbia. It is forecast to recover to 3.1 per cent in 2026 and strengthen further to 3.5 per cent in 2027. This acceleration is supported by major public investment and infrastructural projects across the region.
• Central Asia: Growth increased to an estimated 6.9 per cent in 2025, exceeding expectations on the back of strong consumption, robust remittance inflows, high credit growth and elevated investment. Growth in the region is forecast at 5.6 per cent in 2026 before moderating to 5.3 per cent in 2027.
• Eastern Europe and the Caucasus: Regional growth is projected at 2.9 per cent in 2026 and 3.9 per cent in 2027. Ukraine’s growth forecast for this year has been revised down to 2.5 per cent as the economic impact of a potential peace deal would take time to fully materialise.
• Türkiye: Growth reached 3.7 per cent in 2025 despite elevated uncertainty, market volatility and tighter macroeconomic policy. It is expected to accelerate further to 4.0 per cent in 2026 and 4.5 per cent in 2027.
• Southern and eastern Mediterranean: The GDP growth forecast for the region has been revised up to 4.2 per cent in 2026, driven by a recovery in oil output in Iraq, and is expected to remain around 4.1 per cent in 2027.
• Sub-Saharan Africa: Growth strengthened to an estimated 5.4 per cent in 2025, boosted by higher commodity export receipts, and is expected to moderate to 5.0 per cent in 2026 and 4.9 per cent in 2027.