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Add to Preferred SourcesMiddle East conflict is raising risks to growth and inflation in countries covered by the European Bank for Reconstruction and Development (EBRD), the bank warns in its latest Regional Economic Update. The brief, “Potential economic impact of the conflict in the Middle East,” shows how higher energy and fertiliser prices, trade and tourism disruptions, and tighter financial conditions are feeding through EBRD regions, especially where links to Gulf markets are strong.
EBRD Chief Economist Beata Javorcik says the war underlines how quickly geopolitical shocks can ripple through energy markets, supply chains, and financial conditions. Energy prices have climbed as production and transport routes in the Persian Gulf face disruptions, even though oil and gas remain below historical peaks. The update warns that if oil stays above 100 dollars per barrel and supply‑chain bottlenecks in chemicals and metals persist, global growth could fall by at least 0.4 percentage points and inflation rise by more than 1.5 points, trimming EBRD‑region growth by up to 0.4 points.
Gas markets remain tight, with European storage levels well below recent averages. Even if fighting ends soon, prices may stay high as buyers rebuild inventories at a slow pace. Fertiliser raw materials and industrial inputs such as aluminium, sulphur, and petrochemicals that pass through the Strait of Hormuz are under pressure, raising the risk of higher food and production costs. Countries like Iraq, which depend heavily on Gulf trade, face particular strain, even if cereal stocks offer some buffer.
Tourism and remittances are also under pressure. Tourism‑dependent economies such as Jordan expect fewer visitors, while remittances from Gulf Cooperation Council countries to countries like Lebanon, Jordan, and Egypt may weaken. At the same time, bond yields have risen in the southern and eastern Mediterranean and Türkiye, reflecting tighter financial conditions that could push capital outflows higher if markets worsen.
The EBRD expects hardest impacts on countries with high dependence on energy, fertiliser, and food imports, strong links to the Gulf, and limited fiscal space, including Egypt, Iraq, Jordan, Kenya, Lebanon, Moldova, Mongolia, North Macedonia, Senegal, Tunisia, Türkiye, and Ukraine. The bank stresses that the long‑term consequences may include deeper energy‑security concerns and a more fragmented global trade system, even as higher prices boost revenues for some commodity exporters such as Russia. The EBRD says it stands ready to support its clients and countries as they navigate these mounting risks.