France 24 and RFI present. Hello everyone and thank you for joining us for 'Here Europe' on France 24 and Radio France Internationale. We will discuss the state of the European economy, still heavily impacted by the war in the Middle East. The European Commission's spring forecasts lowered growth to 0.9% in 2026. Inflation is up to 3%. We will obviously discuss these economic prospects from a rather atypical bank, the European Bank for Reconstruction and Development. The EBRD, created in 1991 to help build a new post-Cold War era in Central and Eastern Europe. It is owned by 77 countries as well as the European Union and the European Investment Bank. We are pleased to welcome today its president for six years, Odile Renaud-Basso. Hello. I recall that you were previously the Director General of the Treasury in France. You know the economy well, so to speak, your own growth prospects. What does it reveal about the economic situation in Europe, especially Eastern Europe, which you know well?
Well, it is clear that growth prospects have generally been revised downward, both for Europe and for all the regions and countries in which we operate. Overall, we have just updated our growth forecasts and for 2026, we have revised them down by 0.5% on average across all our countries, across our entire region, and then with a slightly smaller revision for 2027. All this is based on the impact of the situation in the Middle East, a fairly significant increase in oil prices over the past three months with quite significant volatility depending on the state of discussions and communication from the various actors involved in this conflict. But we clearly see rather negative trends, an impact on the economy with scenarios that can be quite different on inflation. We have seen the European Central Bank already take a first measure in three years by raising interest rates, and so all of this will have a rather slowing effect on the global economy.
So as president of the European Bank for Reconstruction and Development, you stated that government support for emerging economies affected by this conflict in the Middle East must remain temporary and targeted as budgetary constraints tighten. Translation into practice.
Many countries have taken demand-side measures to reduce the increase in energy prices, for example pump prices. Prices at the pump across all our regions have increased by 30%. So practically all governments have taken mitigation measures to cap the increase in gas prices, electricity prices, or gasoline prices at the pump. My message is to say that these measures must be temporary and very targeted because they can be extremely costly. And there are countries that have limited fiscal room for maneuver. All countries, all countries in the entire world, not just in our region, but we don't intervene in France, but this reasoning can also apply to France. The debt situation in many countries has increased sharply after Covid, after the impact of the war in Ukraine, and so the margins are quite limited and the ability of countries to take mitigation measures for the increase in energy prices is quite weak.
Furthermore, your bank is heavily involved in the region, particularly in the post-war reconstruction of Gaza estimated at 46 billion euros. In Jordan, since 2024, you have invested 200 million euros, double the amount of the previous five years. You are not disengaging. You have even announced deploying 5 billion euros in countries affected by the repercussions of the war in Iran.
I consider that our bank, and this is also the point of view of the shareholders, we have a countercyclical role, that is to say we are a development bank, a multilateral development bank, and our role is really to help countries face more difficult situations when the private sector, when private investors tend to withdraw and be less able to take risks. We must do all this obviously while measuring our own risks. We must preserve our financial strength. We are an institution with a very good triple-A rating and so on. That is very important for us. But we have the capacity, given our balance sheet, to provide financing and continue to support our clients in more difficult situations. For example, for countries affected by the conflict in the Middle East, we have adapted our instruments to be able to provide liquidity support, emergency financing to our clients to help them face, for example, the increase in energy prices, the increase in import prices that they can suffer when there is a currency depreciation. So we are active in a crisis situation, and the most striking case from this point of view is obviously Ukraine, where we continue to invest.
We will talk about Ukraine right away, but let's focus on the countries where your annual meeting of the EBRD was held in early June in Riga and Tallinn. You declared that Estonia, Latvia, Lithuania were the most beautiful successes of the transition from a centralized economy, so Soviet, to a market economy, as well as the enlargement of the European Union. Let us acknowledge that there are still problems of corruption in these Baltic countries, and they also have a visceral fear of Russia which leads them to invest almost exclusively in defense.
Today, these are countries that have indeed undergone an extraordinary transformation, with, for example, an innovation capacity, start-ups that are extremely successful on international markets, and so on. They are in a number of aspects even ahead of other EU countries. They have faced issues of money laundering and so on in the past, but there have been quite strict measures to strengthen controls in the banking system and so on that have been taken, which have allowed them to really get back on track. And so these are countries whose economic potential today is significant, the economic dynamism is significant. However, they are negatively impacted by the fact that they are close to Russia. These are countries that were part of the Soviet bloc, for which independence is a really extremely important reality. We have seen with the war in Ukraine a reduced appetite of international investors to invest in these countries because they are seen as close and possibly affected by the war. And secondly, they themselves must indeed make a defense effort, increase defense spending like all European countries, they are ahead, they invest particularly heavily in this area, and hence the interest for them to have investors like us who continue to support the private sector since these are also economies that are quite small in size and so, for example, financial markets still lack liquidity, they are markets that are a bit narrow. So our action is really aimed at helping to develop financial markets, venture capital financing, equity financing, and the energy transition which is extremely important for these countries because they were historically very dependent on Russia, connected to the Russian system, and now they have connected to the European system with a lot of investments in renewables in particular.
So as you said, support for Ukraine is one of your priorities with 10 billion euros deployed. Moreover, it is also one of the priorities of the European Union. The war in Ukraine is at the gates of Europe and it is dragging on. Since June 11, its duration has exceeded that of the First World War. A war that weighs on the morale of the inhabitants. It is also a psychological war that is being played out. Odile Renaud-Basso, your bank finances energy projects subject to Russian attacks to demoralize populations on electrical infrastructure. You finance 135 protective shelters for electrical transformers. That is important to rebuild during the war.
