Oil price rebound to boost economic growth, says European bank

Europe's development bank predicted Wednesday a pick-up in economic growth in most of the regions where it operates this year as rebounding oil prices boost Russia and other commodity exporters.

One weak spot is Turkey where growth is expected to slow as political uncertainty hits the economy, the European Bank for Reconstruction and Development (EBRD) said at its annual meeting in Cyprus.

Average economic growth in the EBRD region -- which also includes countries in eastern and central Europe, central Asia and the Mediterranean -- is expected to pick up to 2.4 percent in 2017 and 2.8 percent in 2018, the EBRD said.

That would mark an improvement from growth of 1.8 percent seen in 2016.

"Overall the news is good. Growth is faster... despite all the risks, all the global challenges," EBRD chief economist Sergei Guriev told a news conference. The rebound in world oil prices since the first quarter of 2016 has been positive for Russia as well as countries that rely on it for remittances and export demand, the bank said.

Russia is emerging from a two-year recession but even so the economic recovery is expected to be relatively muted with growth seen at 1.2 percent this year and 1.4 percent in 2018, the EBRD said.

"Even though recession in Russia is over, we forecast only a very slow recovery and we don't see remittances going back to the peak of 2013, which means for the countries that rely on remittances from Russia this is continuing to be a difficult time," Guriev said.

Growth in Turkey is predicted to slow further to 2.6 percent in 2017 from 2.9 percent in 2016 as security and political concerns hit investor sentiment and tourism.

"While increased disposable income on the back of a 30-percent hike in the minimum wage in January 2016 resulted in an increase in private consumption, growth was hit by a sharp fall in tourism receipts, Russian sanctions, and geopolitical tensions in the Middle East," the EBRD said in its economic update.

"Weak consumer and investor sentiment following the attempted military coup in July 2016 compounded these problems."

Growth in the southern and eastern Mediterranean region -- which includes Egypt, Jordan, Morocco and Tunisia -- is projected to pick up to 3.7 percent in 2017, from 3.4 percent last year.