Middle East War Drives Up Energy Costs, EBRD Downgrades European Economic Outlook
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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.