The European Bank for Reconstruction and Development (EBRD) expects Türkiye’s economy to expand by 3.0% in 2026, down from a 3.5% forecast made in June, the bank said in its new report published Thursday.

Growth is projected to accelerate to 4.0% in 2027, the bank said in its latest Regional Economic Prospects (REP) report.

The downward revision reflects weaker domestic demand amid elevated inflation and tight financial conditions, as well as the continuing impact of the conflict in the Middle East.

Growth is slowing ‌across a range of emerging market nations, with economies in Iraq, Lebanon and Ukraine hamstrung by the effects of war, according to the development bank.

High energy prices, rising borrowing costs and issues ranging from ​drought in Europe to the ongoing closure of the Strait of Hormuz are combining to ​depress economic growth, the EBRD regional economic outlook found.

Across the 40 economies it covers, the ⁠EBRD expects growth of 2.5% this year, 0.6 percentage points below its June forecast and its ​second consecutive downgrade.

"What's a cause for concern is that there are multiple pressure points, from diesel to cost ​of wheat to cost of borrowing," EBRD chief economist Beata Javorcik said.

"Pressures are building up, and there are considerable downside risks to our forecast."

The bank also warned about wheat prices and exports from Ukraine.

Wheat ​prices globally are ⁠up roughly 30% since February as Black Sea attacks cut Ukrainian exports to the lowest level since April 2022, Javorcik said.

Elevated wheat prices threaten food-importing economies, particularly countries such as Egypt that heavily subsidize bread and grain products. Russia and Ukraine combined account for ​roughly a quarter of global wheat exports.