Risk of ‘serious’ economic shock if Iran war drags on, EBRD chief says

Published on 14/04/2026 - 10:44 GMT+2

The President of the European Bank for Reconstruction and Development has warned of a “much much superior economical impact” connected the EU if the warfare successful the Middle East escalates aft diplomatic efforts betwixt the US and Iran to scope a woody fell flat.

Speaking to Euronews connected Monday, Odile Renaud-Basso, who has led the multilateral improvement slope since 2020, said that portion the existent script successful the Middle East risks curbing maturation and expanding ostentation successful the economies successful which the EBRD operates, the economical repercussions of a drawn-out warfare volition beryllium “wider and much significant.”

The economical impacts are “directly related” to the soaring terms of energy, she added. The effectual closure of the Strait of Hormuz since the struggle erupted, coupled with the demolition of cardinal vigor sites successful Iran and the Gulf, person sent planetary lipid and state prices climbing and forced governments worldwide to intervene with substance subsidies and taxation cuts.

The EBRD estimates that a script successful which lipid prices proceed astatine astir $100 (€85) per tube could dent growth by 0.4% and summation ostentation by astir 1.5% successful the bank’s countries of operation.

“This doesn't mean recession, but if the concern worsens, past the interaction volition beryllium wider and much significant,” Renaud-Basso told Europe Today.

“We are talking astir lipid prices astatine $100 (per barrel), but it could spell precise overmuch supra if the concern worsens,” she added. “If the Strait of Hormuz remains blocked for a precise agelong play of time, if determination is much demolition of accumulation capacities successful the Gulf and truthful distant (...) past the economical interaction is apt to beryllium overmuch much serious.”

Renaud-Basso besides said that Europe faces a situation due to the fact that its governments look a “much much limited” fiscal space, preventing them from introducing measures that could “counterweigh increases successful vigor prices” successful the aforesaid mode arsenic they did during the Covid-19 pandemic oregon the 2022 vigor crisis.

Last week, the EBRD announced plans to transmission €5 cardinal successful investments successful 2026 to countries successful the Middle East hit by the economical repercussions of the conflict.

The bank’s archetypal effect volition absorption connected economies straight affected by the conflict, specified arsenic Iraq, Jordan, Lebanon, the West Bank and Gaza, arsenic good arsenic neighbouring countries grappling with spillover effects, specified arsenic Egypt, Turkey and Armenia.

“When you person backstage assemblage banks withdrawing oregon reducing their vulnerability (...) we are stepping in, successful a way, arsenic a counter-cyclical bank, which is determination to proceed to enactment investment,” Renaud-Basso said.

The instauration says it is “ready to supply enactment to each different economies wherever it operates” that are “affected by the broader economical information issues, arsenic good arsenic emerging macroeconomic impacts.”

Established successful the aftermath of the Cold War to rebuild post-Soviet economies, the slope contiguous invests chiefly successful Central and Eastern Europe, Central Asia, and the Southern and Eastern Mediterranean, supporting the modulation to market-oriented economies done backstage investments.

It has go a large subordinate successful concern successful Ukraine, deploying a full €9.1 cardinal successful the state since Russia’s penetration successful 2022, with a absorption connected investments successful vigor security.

Renaud-Basso said that the concern successful the Middle East is besides having repercussions connected Ukraine, including by pushing up vigor prices, depleting stocks of anti-missiles instrumentality and ensuring Russia benefits much from income of fossil fuels.