Economic Impact of the Middle East Conflict: EBRD Report
The European Bank for Reconstruction and Development (EBRD) has published an economic update titled "Potential economic impact of the conflict in the Middle East". The report identifies the countries within its area of operations that are most exposed to the fallout of the conflict.
Countries Most Affected
The EBRD notes that economies in its region with high dependence on energy, fertilizer, and food imports, close ties with Gulf countries, and limited budget margins are most likely to be affected. These countries include:
- Egypt
- Iraq
- Jordan
- Kenya
- Lebanon
- Moldova
- Mongolia
- North Macedonia
- Senegal
- Tunisia
- Türkiye
- Ukraine
Transmission Channels Identified by the EBRD
The EBRD forecasts that the conflict will weigh on economic activity in its regions through:
- Higher energy and fertilizer prices
- Disruptions to trade and tourist flows
- Tighter financing conditions
Impact on Trade
Economies dependent on routes passing through the Strait of Hormuz, such as Iraq, may face particular difficulties, although existing reserves of certain raw materials like wheat may provide some cushioning.
Impact on Tourism and Remittances
Economies highly dependent on tourism, such as Jordan, are expected to experience a decline in arrivals. Remittances from GCC countries, an important source of income for Lebanon, Jordan, and Egypt, may also come under pressure.
Impact on Financial Conditions
Bond yields have risen in the southern and eastern Mediterranean region and in Türkiye. Capital outflows have remained manageable so far but could intensify if global financial conditions deteriorate further.
