Finance
Iran conflict a threat to economic growth, EBRD president says
Published by Global Banking & Finance Review®
Posted on March 5, 2026
2 min readLast updated: March 5, 2026
Quick Summary
EBRD President Odile Renaud‑Basso warns that the widening US‑Iran conflict threatens economic growth across the bank’s regions, particularly via disrupted energy supplies and rising oil prices, though impacts are limited so far outside Lebanon.
Iran conflict a risk to economic growth, EBRD president says
EBRD President Discusses Economic Risks Amid Iran Conflict
By Jonathan Spicer and Libby George
Impact of the U.S.-Iran Conflict on Regional Economies
ISTANBUL/LONDON, March 5 (Reuters) - The widening U.S.-Iran war is a risk to economic growth, the president of the European Bank for Reconstruction and Development told Reuters on Thursday, but said the fallout depends on how long the conflict lasts.
EBRD President Odile Renaud-Basso told Reuters in an interview in Istanbul that the conflict "can reduce risk capital" for the region - but that apart from Lebanon, the fallout thus far was contained.
"For the time being, it's limited," she said, adding that "the risk is on the downside."
EBRD Growth Projections and Contributing Factors
Last week, the EBRD pegged growth for the 41 countries it covers at 3.6% for this year and 3.7% in 2027, boosted by spending on big infrastructure projects in Europe, but offset by U.S. tariff and trade uncertainty.
Strait of Hormuz Closure and Energy Market Implications
The war has effectively closed the Strait of Hormuz, a key shipping artery, sending crude prices up some 12% - and sounding an alarm for many of the energy-importing countries in which the EBRD works.
Renaud-Basso said that the length of the closure of the Strait of Hormuz and the duration of oil and gas price spikes were key, but that high global gas stocks could help cushion the blow.
Lebanon: The Exception in Regional Stability
The exception, however, is Lebanon, which she said is "very much at the core" of current turbulence. Lebanese group Hezbollah launched rockets and drones into neighbouring Israel on Monday, prompting ongoing full-blown hostilities with Israel.
"There we can expect quite a significant impact on the economic situation and broadly," she said.
Broader Economic Implications and Monetary Policy Challenges
Ukraine and International Funding
In Ukraine, Renaud-Basso said international funding for the year is unlikely to change despite the new conflict.
Energy Prices, Inflation, and Central Bank Responses
But more broadly, she said an extended spike in global energy prices could also drive inflation higher - making it tricky for central banks to cut interest rates.
"This is a new challenge in terms of monetary policy. I think that we need to be careful," Renaud-Basso said.
(Reporting by Jonathan Spicer in Istanbul, writing by Libby George; Editing by Amanda Cooper and Nivedita Bhattacharjee)
Key Takeaways
- •EBRD sees downside risk to regional growth if the US‑Iran conflict drags on, especially via reduced risk capital and energy shocks (e.g. stranded shipping, higher oil prices) (lemonde.fr).
- •Despite the upheaval, growth forecasts remain resilient: the EBRD projects 3.6% GDP growth in 2026 and 3.7% in 2027 across its 41 countries, helped by infrastructure investment and tempered by US tariff uncertainty (tass.com).
- •The temporary closure of the Strait of Hormuz—a chokepoint for ~20% of global oil—has driven Brent crude up around 10–13%, with worst‑case scenarios envisioning prices above $100 if disruptions persist (en.wikipedia.org).
References
Frequently Asked Questions about Iran conflict a threat to economic growth, EBRD president says
1How does the Iran conflict threaten economic growth?
The EBRD president warns that the conflict could reduce risk capital for the region, disrupt trade routes, and increase oil prices, all of which threaten economic growth.
2What is the impact of the Strait of Hormuz closure?
The closure has sent crude oil prices up by about 12%, raising concerns for energy-importing countries where the EBRD operates.
3Which countries are most affected by the fallout from the conflict?
Apart from Lebanon, where the situation is considered severe due to ongoing hostilities, the fallout has been contained in other countries.
4How does high global gas stock affect the situation?
High global gas stocks could help cushion the economic blow caused by higher oil and gas prices as a result of the conflict.
