The European Bank for Reconstruction and Development sharply raised growth forecasts on Tuesday for the 37 countries in which it operates, saying improving exports, a revival in investment and firmer commodity prices were supporting a broad upswing.
Average economic growth for the group, which ranges from Morocco to Mongolia, is now expected to hit 3.3 percent this year, compared to 2.4 percent the multilateral lender had forecast in May and 1.9 percent last year.
Turkey and Poland, which have become two of the EBRD’s biggest markets since it stopped lending in Russia in 2014 in response to the Ukraine crisis, are seen among the biggest drivers of growth. The EBRD now sees Turkey growing at 5.1 percent this year and 3.5 percent in 2018.
This year’s projection is almost double May’s forecast, which was lowered following April’s power grab by Turkish President Recep Tayyip Erdogan. Poland’s expansion meanwhile is expected to top 4 percent following a burst of fiscal stimulus there.
“We see an upward revision in growth pretty much everywhere and what is good news this time is how broad-based it is,” EBRD chief economist Sergei Guriev told Reuters. “One of the biggest revisions was on Turkey and that is due to very bold fiscal stimulus and credit expansion stimulus which the government undertook to respond to potential uncertainty related to political turbulence.”
Set up by governments in 1991 to invest in the ex-communist economies of Eastern Europe, the EBRD has expanded its mandate in the last decade and now operates in parts of North Africa and Central Asia as well as euro crisis countries Greece and Cyprus.