EBRD ramps up economic forecasts

LONDON: Europe's development bank on Tuesday upgraded the growth forecasts for the 37 different countries it invests in, with a particularly favourable outlook for Turkey.

The European Bank for Reconstruction and Development (EBRD) said in a statement that growth in most of the countries it covers in central, southern and eastern Europe, as well as in the central Asian and Mediterranean regions, was "accelerating."

While Russia and Central Asia were benefitting from higher oil prices, all of the regions were getting a boost from higher exports, investment and wage growth, helping to put growth on a broader footing.

In the first half of this year, three quarters of EBRD countries saw a surge in annualised growth, the highest such proportion of countries since 2010.

The average rate of growth was 3.3 percent in the period from January to June, up from 1.9 percent in 2016.

And the countries are expected to grow again by 3.6 percent in the second half of 2017, the EBRD said.

The highest growth forecast was for Turkey, with the EBRD predicting economic expansion there of 5.1 percent for 2017, nearly double the previous forecast of 2.6 percent in May.

A $71-billion stimulus package introduced towards the end of 2016 and the start of 2017 by the Turkish government, was seen as the main factor behind the acceleration.

Nevertheless, the short-term nature of the measures meant that the pick-up may not last, with the economy projected to expand by just 2.5 percent in 2018.

Russia is expected to return to growth of 1.8 percent in 2017 on the back of a gradual recovery in oil prices, but growth was projected to slow slightly to 1.7 percent in 2018.

The EBRD warned of a number of risks for its regions as a whole, including "growing geopolitical tensions", "persistent security threats" and "the growing appeal of populist anti-globalisation policies in advanced economies".

The bank was set up after the fall of the Berlin wall to help central and eastern European countries transition into market economies, and has since extended its reach into Mediterranean countries.