EBRD warns of lower growth and windfall to Russia from Iran war

LONDON, March 26 (Reuters) - Growth forecasts for certain developing markets are likely to be revised down by as much as 0.4 percentage points in the next regional economic outlook in June if energy prices remain elevated, the European Bank for Reconstruction and Development said on Thursday.

Oil prices have surged since the U.S. and Israel launched strikes on Iran, which retaliated by effectively closing the key Strait of Hormuz.

• Last month, the bank said it expected 3.6% growth this year and 3.7% in 2027 in the roughly 40 countries it covers.

• The bank said the economic impact will depend on the duration of the war in the Middle East and the extent of energy infrastructure damage.

• "The direct negative effects on GDP growth via energy costs, the price of fertilisers and food staples, disruptions to supply chains, tourism and remittances from the GCC (Gulf Cooperation Council) will be compounded by higher inflation, greater pressures on government budgets and tighter financing conditions in response to rising inflation," it added.

• A sustained oil price above $100 per barrel and disrupted supply chains could increase global inflation by more than 1.5 percentage points, the bank said.

• Lebanon, Jordan, Iraq, Egypt, Ukraine, Mongolia, Senegal, Tunisia, Moldova, Kenya, Turkey and North Macedonia are the most impacted economies in the EBRD regions, when taking into account myriad factors from energy and food to fiscal capacity to cushion the shock.

• Egypt, Morocco and Senegal also have both large energy trade deficits and economies with high oil intensity, the bank said.

• In Azerbaijan, Iraq, Kazakhstan, Mongolia and Nigeria, oil and gas trade surpluses range from 11% to 39% of GDP, but the bank noted that production has been reduced or halted at Iraq's largest oil fields.

• For every $10 per barrel increase in the oil price, Russia gets a "windfall in revenue" from oil, gas and fertiliser sales equivalent to 1.5 percentage points of 2025 GDP, the EBRD estimated.

• Oil prices could reach $180 per barrel if Gulf oil supplies remain restricted due to short-term inelastic demand, the bank said.