Brussels, 30/07/2012 (Agence Europe) - The countries of the southern and eastern Mediterranean in which the European Bank for Reconstruction and Development (EBRD) is looking to invest this year “are continuing to face serious macroeconomic challenges amid a climate of increasing uncertainty”, the bank says in a report last week, which is available on its web site. It does not expect any short-term improvement.
The bank is extending its support from Central and Eastern Europe to include four Mediterranean countries: Morocco and Egypt, EBRD founding shareholders, along with Tunisia and Jordan, which have newly been admitted as shareholding members. “The economies of these four countries have taken a hit from declining tourism, FDI (Foreign Direct Investment) and trade, and investors have adopted a wait-and-see approach, at least in the short term”, the report states.
Prospects for growth are weak for the next few years, due to increased government spending on social benefits and subsidies in a response to social pressures which had exacerbated fiscal deficits across the board. Only Tunisia, the EBRD says, is “showing signs of recovery in the first quarter of 2012 as real GDP grew by 4.8 per cent, year-on-year”. The economic recovery seems to be broadbased, and the report noted a rise in the first quarter of 2012 of 33% in the tourism sector and of 29% in foreign direct investments. However, recovery remains fragile because of social instability, the report says.
The general sluggishness is of concern to the bank as all the countries where the EBRD already invests are feeling the effects of the eurozone crisis. The report says the bank expects economies to grow more slowly in 2012 and 2013 than envisaged in May, mainly because of a downgrade of projections for growth in Russia. (FB/transl.rt)