(London) The war in the Middle East, whose front has spread towards Lebanon, is expected to further undermine the country’s already fragile economy, the European Bank for Reconstruction and Development (EBRD) warned on Thursday in forecasts revised economics.
Posted at 6:40 a.m.
For its part, the Russian economy, boosted by its oil sales, continues despite sanctions linked to the war in Ukraine to defy the forecasts of the institution, which is once again revising upwards the country’s prospects.
After a contraction of 0.2% in 2023, the Lebanese gross domestic product (GDP) is expected to decline by 1% this year, according to projections from the EBRD, which until now anticipated slight growth in 2024.
Lebanon, plunged into political impasse and weighed down by the stagnation of essential reforms, has seen its GDP decline by more than 40% cumulatively since 2018.
Almost a year after the start of the war in Gaza, triggered by the unprecedented attack by the Islamist movement Hamas against Israel on October 7, 2023, Lebanon has in turn become a front line.
The projections should further darken, because “any escalation will certainly weigh on growth” in the country, Beata Javorcik, chief economist of the EBRD, commented to AFP.
Russia, for its part, is seeing its growth projections improve: its GDP should grow this year at the same rate as last year (+3.6%), where the institution predicted a slowdown.
Moscow can count on “an estimated 10% increase in oil export prices and solid trade” with countries that do not impose sanctions, such as China and India, explains the EBRD.
But “the picture is less bright than it seems, because currently the Russian economy is overheating,” fueled by public defense spending and rising wages, “and that means that next year it will there will be a significant slowdown,” according to Beata Javorcik.
The EBRD, founded in 1991 to help former Soviet bloc countries transition to a market economy, has since expanded its scope to include countries in the Middle East, Central Asia and North Africa.
Overall, the economies of the countries in which it is present are expected to grow by 2.8% this year, less than previously anticipated, also penalized by the stagnation of mining activities in Kazakhstan and Uzbekistan and a serious drought in the south and in eastern Mediterranean.
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