Regional Growth Forecasts Lowered Amid Tensions
The European Bank for Reconstruction and Development expects economic contraction across parts of the SEMED region through 2026.
Updated on Sept. 24, 2026 in Economic Indicators
Live Poll
Is your personal cost of living becoming less predictable due to current global economic events?
Economic growth forecasts for the Southern and Eastern Mediterranean (SEMED) region have been revised down to -0.7 per cent for 2026. Regional instability and disrupted energy trade routes are weighing on household and national finances across several countries.
Why it matters
Heightened regional tensions have spiked energy costs and constrained vital trade corridors, complicating financial planning for households in affected areas. These challenges have led to significant contractions in specific nations while creating disparate outcomes for others in the region.
The regional growth forecast sits at -0.7 per cent for 2026, though expectations improve for 2027. Individual economies face varying pressures, such as Tunisia's 31.6 per cent increase in energy import costs between January and July 2026.
The players
European Bank for Reconstruction and Development
An international financial institution that monitors regional economic health and provides growth forecasts.
International Monetary Fund
A global organization that provides financial support and monitoring for countries through specific economic programmes.
The details
Regional economic pressures are largely driven by disruptions to energy exports and trade. In Iraq, restricted access to the Strait of Hormuz has forced oil exports onto alternative routes that handle less than a quarter of normal volume, resulting in an expected 12.0 per cent economic contraction. Meanwhile, Tunisia has used government subsidies to buffer the impact of rising global energy prices on households.
Timeline
January-July 2026 saw a 31.6 per cent increase in Tunisia's energy import bill.
April 2026 inflation in Lebanon surged to 20 per cent year-on-year.
May 2026 marked a peak in Jordan's inflation at 2.8 per cent.
July 2026, Egypt successfully completed the seventh review of its IMF-supported programme.
2027 represents the projected year for a regional economic rebound.
Money Landscape
This growth adjustment follows a period of significant volatility for trade and energy markets across the Mediterranean. These developments update regional performance benchmarks established earlier in the year.
Consumers in the region may see continued pressure on household budgets due to energy-related price fluctuations. Residents should consult with a qualified financial professional to assess how regional economic shifts could impact their specific local currency and purchasing power.
The takeaway
Regional instability continues to create a difficult financial environment with sharply different outcomes for local economies. Keep an eye on domestic energy policy updates and official central bank communications to understand potential impacts on your local cost of living.
Further reading
For broader trends on international fiscal policy, visit Economic Indicators.
Live Poll
Is your personal cost of living becoming less predictable due to current global economic events?
