The European Bank of Reconstruction and Development (EBRD) has warned that the war in Ukraine is having a “profound impact” on the 38 economies in which it operates, as recent increases in food and energy prices have added to existing inflationary pressures.

The London-based multilateral development bank expects real gross domestic product (GDP) growth of 1.1% in 2022 across the regions where it invests, marking a 0.6 percentage point decrease since its last forecast in March 2022. 


This downward revision is mostly driven by a larger-than-anticipated contraction in Ukraine’s economy, which is now expected to decline by 30% this year. The forecasts are significantly down on the 6.7% growth recorded in 2021 across the bank’s regions of operations.

Beata Javorcik, the EBRD’s chief economist, said that the situation across the bank’s regions now is “more concerning”, given that Russia’s war in Ukraine is “further stoking inflation”. 

In March 2022, the average inflation across the EBRD’s regions reached 11.9%, amid rapid rises in prices for energy and agricultural commodities like wheat, corn and soybeans. 

“As we well know, poorer households suffer even [more from] higher rates of inflation than others because food and energy account for a larger share of their domestic budgets,” said Ms Javorcik. 

The bank also noted that European producers are at a disadvantage compared to their global peers, as gas prices in Europe stood above historical highs and at around four times the level seen in the US.

Today, the EBRD begins its annual meeting in Marrakech, Morocco, where representatives from the bank’s 73 country and institutional shareholders will gather from 10–12 May. This is the first time it has held the event in a member country on the African continent.

Despite an overall gloomy picture, the EBRD expects output in the central Asian country of Turkmenistan to grow by 6% in 2022, as it stands to benefit from elevated gas prices and isolation from Russia and global capital markets.

While the Ukrainian economy saw the largest downward revision in its 2022 growth forecast, the EBRD has a more negative outlook for several other economies in light of the war and other global developments.

Mongolia saw its 2022 growth forecast revised downward by 2.5 percentage points to 3.5%, due in part to its location and reliance on Russia for transportation of fuel and other supplies.

“The renewed outbreak of Covid-19 in China reduces the choice of alternative supply routes while also hampering Mongolia’s ability to benefit from elevated commodity prices”, wrote the EBRD.

GDP growth in Ukraine is expected to bounce back by 25% in 2023 on the assumption that substantial work begins to rebuild the country. This follows the severe damage caused by Russia’s invasion to residential, commercial and industrial assets and infrastructure.

The OECD recently warned that Ukraine will have an “enormous” investment need for its eventual reconstruction, with foreign direct investment playing a fundamental role in that process.