This is reported by RBK-Ukraine citing "Prospects for Regional Economy" from the EBRD for February. This information is also provided by Kontrakty.UA.
According to the forecast, growth in the economies where the bank invests is expected to average 3.2% this year, before accelerating to 3.4% by 2026.
This downward revision is primarily due to weaker external demand in Central Europe, the Baltic states, and Southeast EU countries.
The new report titled "Weakening Dynamics Amid Trade and Investment Fragmentation" discusses the increasing uncertainty surrounding potential hikes in U.S. import tariffs and corresponding measures from trading partners.
The report states that merely the growing uncertainty is enough to deter investments, weaken production, and disrupt global supply chains. Looking beyond uncertainty, the short-term impact of tariffs and trade restrictions on individual economies will depend on whether tariffs are applied universally or only to selected trading partners.
A scenario where the United States raises tariffs on all imports by an additional 10 percentage points could lead to a GDP reduction in EBRD regions of 0.1-0.2% in the short term. Slovakia, Hungary, and Lithuania are among the European economies that are most vulnerable to such measures due to their overall trade dependence on the U.S. market.
The report indicates that Bulgaria, Slovenia, and Romania are the most vulnerable to the recently announced U.S. tariff hikes on steel and aluminum.
Economic analysis also shows that if tariffs are applied selectively, economies with privileged access to the U.S. market may benefit from trade reorientation and increased foreign direct investment (FDI).
Rising geopolitical tensions have led to a sharp decline in trade and foreign direct investment between rival geopolitical blocs centered around the U.S.-led West and the China/Russia-led East. Simultaneously, foreign direct investments from China and the U.S. into "transit" economies such as Uzbekistan, Vietnam, Mexico, the United Arab Emirates, and Saudi Arabia have surged, as highlighted in the report.
Recall that U.S. President Trump signed decrees to raise tariffs on all steel and aluminum imports to 25%, with no exceptions or exclusions. These will take effect starting March 12. Additionally, the U.S. President stated his intention to impose tariffs on cars of "around 25%", semiconductors, and pharmaceuticals.
Trump also announced plans to impose 25% tariffs on goods from the European Union. According to him, "this will apply to cars and everything else".