The European Bank for Reconstruction and Development (EBRD) is forecasting that economic growth in the southern and eastern Mediterranean (SEMED) region will slow from 6 per cent in 2021 to 2.9 per cent in 2022, according to the Bank’s latest Regional Economic Prospects (REP) report.
The forecast is a modest upward revision on the Bank’s previous projection in May, when it expected growth of 2.5 per cent for this year. The impact on the SEMED region of the war on Ukraine is being felt through higher consumer prices for oil and food, with significant spillovers for public budgets, food security and the medium-term drivers of growth.
All of the region’s economies – especially Egypt, Tunisia and Jordan – are net fuel importers and dependent on food imports. As a result, inflation has soared in 2022 and pressures on foreign reserves have increased.
The impact on tourism has varied but, overall, it has weighed on the recovery in most SEMED economies. Moreover, supply chain disruptions have implications for the region’s more export-reliant economies, notably Morocco and Tunisia, both of which are affected by slowing demand from Europe.