IS: Regional Economic Prospects 2026

Why It Matters

The shifting growth outlook and energy‑driven policy choices will reshape investment flows and fiscal strategies across Europe and Africa, directly affecting corporate profitability and sovereign risk assessments.

Key Takeaways

• Middle East conflict spikes energy prices, dampening EBRD region growth.
• Regional GDP forecast falls to 3.1% in 2026, then rebounds.
• Central Europe relies on public spending; Central Asia, Sub‑Saharan show resilience.
• Europe’s competitiveness debate centers on energy costs versus managerial efficiency.
• African nations pursue domestic energy projects to mitigate combined price shocks.

Summary

At the EBRD’s 35th annual meeting, senior economists examined the 2026 regional economic outlook, emphasizing how the Middle‑East conflict and soaring energy prices are reshaping growth trajectories across Europe, Central Asia and Africa.

The latest forecast trims overall regional GDP growth to 3.1% in 2026, down from 3.4% in 2025, before a modest rebound to 3.6% in 2027. Manufacturing momentum remains weak, while public‑sector spending on infrastructure and defence cushions Central Europe. By contrast, Central Asian and Sub‑Saharan economies show relative resilience thanks to commodity exports and new energy projects.

Panelists highlighted divergent views: Barta argued that Europe’s competitiveness hinges more on managerial efficiency than on a 1‑1.5% gas cost increase, while Paul Donovan warned that the US may gain a temporary edge due to lower energy prices. Hiker Hargart cited Kenya’s East African refinery and Senegal’s gas discoveries as evidence of Africa’s proactive response to the triple shock of energy, food and fiscal pressures.

The discussion underscored that energy security now drives the green transition, forcing governments to balance subsidies, fiscal constraints and political feasibility. Investors and policymakers must watch how regional authorities allocate public funds and accelerate renewable adoption, as these choices will dictate growth stability and market attractiveness in the coming years.

Original Description

The launch of the EBRD’s latest Regional Economic Prospects will be in panel discussion format at a special EBRD Annual Meeting 2026 session. The conversation will cover the latest economic forecasts for the regions where the Bank invests. EBRD Chief Economist Beata Javorcik and leading regional experts will discuss how escalating geopolitical tensions alter the economic outlook and reshape policy-making at a time when government finances are increasingly constrained and inflation concerns are resurfacing. The report will be published earlier in the week.

The event is open to all participants and questions from accredited journalists are welcome after the discussion.

Speakers:

Jonathan Charles, Strategy Advisor

Paul Donovan, Chief Economist, UBS Global Wealth Management

Heike Harmgart, Managing Director, Sub-Saharan Africa, EBRD

Beata Javorcik, Chief Economist, EBRD

Elina Ribakova, Senior Research Fellow, Peterson Institute for International Economics