EBRD revises Turkey 2026 economic growth forecast to 4.0% from 3.5%, cuts Ukraine to 2.5% from 5.0%

EBRD revises Turkey 2026 economic growth forecast to 4.0% from 3.5%, cuts Ukraine to 2.5% from 5.0%

EBRD Revises Economic Growth Forecasts for Turkey and Ukraine Amid Geopolitical Uncertainties

The European Bank for Reconstruction and Development (EBRD) has revised its 2026 economic growth forecasts for Turkey and Ukraine, reflecting divergent trajectories shaped by macroeconomic conditions and geopolitical risks. For Turkey, the EBRD upgraded its projection to 4.0% from 3.5%, citing improved financial stability and resilient domestic demand. In contrast, Ukraine's 2026 growth forecast was cut to 2.5% from 5.0%, underscoring the persistent economic challenges linked to Russia's war.

Turkey's Revised Outlook The EBRD's upgraded forecast for Turkey attributes growth acceleration to macroeconomic stabilization efforts, including tighter fiscal and monetary policies, and a recovery in investor confidence. Real GDP growth in 2025 reached 3.7%, driven by strong private consumption and investment despite external headwinds. Financial conditions stabilized in late 2025, with international reserves surpassing $200 billion and narrower credit default swap spreads signaling improved market access. However, downside risks remain, including high inflation (still above 50% as of early 2025) and global trade uncertainties.

Ukraine's Downgraded Forecast Ukraine's 2026 growth projection was reduced to 2.5% amid ongoing war-related disruptions. The EBRD noted that labor shortages, damaged energy infrastructure, and weak agricultural exports continue to constrain economic activity. While the central bank maintained a 15.5% policy rate to curb inflation (which eased to 13.2% in August 2025), the fiscal deficit is expected to reach 22% of GDP in 2025, reliant on $40 billion in external financing from the EU, G7, and IMF. The EBRD emphasized that Ukraine's 5.0% 2026 growth forecast hinges on a ceasefire and post-war reconstruction, which remain uncertain.

Regional Context Across the EBRD's regions, 2026 growth is projected at 3.6%, up from 3.4% in 2025, as economies adapt to trade tensions and supply chain shifts. Turkey's 4.0% forecast aligns with broader regional resilience, while Ukraine's outlook highlights the uneven impact of conflict. The EBRD has committed €22 billion to Turkey since 2009 and €8.4 billion to Ukraine since 2022, focusing on infrastructure, energy security, and private-sector recovery according to EBRD reports and as detailed in their analysis.

These revisions underscore the interplay of domestic policy, global trade dynamics, and geopolitical risks in shaping economic outcomes for EBRD member states.