EBRD Cuts 2026 Growth View to 3.1% as Iran War Lifts Inflation to 6.4%
Updated
Updated · Euronews · Jun 3
EBRD Cuts 2026 Growth View to 3.1% as Iran War Lifts Inflation to 6.4%
3 articles · Updated · Euronews · Jun 3
Summary
A 0.5-point downgrade from February left the EBRD forecasting 3.1% growth across its regions in 2026, after first-quarter expansion slowed to 2.9% year on year.
The bank tied the weaker outlook to the Middle East conflict, saying higher oil and gas prices, Strait of Hormuz shipping disruptions and wider Europe-US energy cost gaps are hurting competitiveness.
Inflation across EBRD economies rose to 6.4% between February and April 2026, up 1.2 points, as energy and food costs climbed and some currencies weakened against the dollar.
Nearly two-thirds of the bank's economies have rolled out fuel caps, tax cuts or targeted subsidies, but the EBRD warned higher borrowing costs and already-heavy debt are straining public finances.
The bank still sees growth recovering to 3.6% in 2027, though it said a prolonged conflict could push energy prices higher, deepen supply-chain disruption and further erode growth.
Will the crisis accelerate a green transition for security, or will high costs force a return to fossil fuels?
With Hormuz disrupted, which nations face the greatest risk of food and energy shortages this year?
Is the Iran war forcing a permanent shift from global trade to national energy independence?
Global Growth Slashed to 3.1%: Geopolitical Shocks, Energy Crisis, and Inflation Threaten Economic Stability in 2026-2027
Overview
In June 2026, major international financial institutions sharply lowered their global economic growth forecasts for 2026 and 2027, mainly due to escalating geopolitical tensions and the ongoing conflict in Iran. These tensions have triggered oil price shocks, which are rippling through critical markets and causing inflation to surge. The International Monetary Fund emphasized the urgent need for broader energy security, while the European Bank for Reconstruction and Development warned that the economic impact depends on how long the conflict and energy disruptions last. As a result, economies worldwide face slower growth, higher costs, and increased pressure on public finances.