European bank raises growth forecast to 3.6% for 2026

By Mucahithan Avcioglu

ISTANBUL (AA) - The European Bank for Reconstruction and Development (EBRD) on Thursday said that it upgraded its growth forecast for its area to 3.6% for 2026.

"The forecast represents a 0.2 percentage point upward revision for 2026 relative to the outlook published in September 2025," the bank said in its Regional Economic Prospects report.

For 2027, the bank forecasts a 3.7% growth, according to the report.

It said although geopolitical strains and trade conflicts remain elevated, their effect on global trade has so far been milder than expected. Swift reconfiguration of supply chains and strong demand for artificial intelligence (AI)-related goods have helped maintain economic momentum across many EBRD countries.

Still, the overall consequences of US tariffs may not yet be fully visible, as imports into the US were accelerated earlier in 2025 ahead of anticipated tariff hikes.

Growth is also being supported by ongoing disinflation, which is strengthening consumer spending, as well as major infrastructure investments that are driving capital formation, according to the bank.

Growth in Central Europe and the Baltic states is projected to rise to 2.9% in 2026 from an estimated 2.6% in 2025, supported by stronger investment ahead of Recovery and Resilience Facility (RRF) deadlines, before easing slightly to 2.7% in 2027.

In the South-eastern European Union, GDP growth is expected to hold broadly steady at 1.5% in 2026 after slowing in 2025, as fiscal consolidation in Romania weighs on consumption. Growth is forecast to rebound to 2.3% in 2027.

The Southern and eastern Mediterranean region is forecast to grow 4.2% in 2026, driven by a rebound in Iraq’s oil output, with growth seen holding near 4.1% in 2027.

- EBRD raises Türkiye's growth forecast to 4% for this year

In Türkiye, growth reached 3.7% in 2025 despite heightened uncertainty and tighter macroeconomic policies. The economy is expected to expand by 4% in 2026 and 4.5% in 2027.

Financial conditions in Türkiye stabilized in the second half of last year as access to international capital markets improved, leading to a recovery in investor confidence. Gross international reserves also surpassed the $200 billion mark for the first time.

According to the EBRD, Türkiye’s macroeconomic stabilization program has balanced its goals of sustaining growth while reducing inflation. Following strong economic performance in 2025, the bank raised its growth forecast for Türkiye to 4% for this year, up from its previous projection of 3.5%.

The bank has invested more than €23 billion ($27.1 billion) in Türkiye, the majority of which is in the private sector.