Southeastern Europe & Mediterranean Emerging Market Economies: Bi-Weekly Report 17 - 30 March 2026

CYPRUS
Cyprus’s earlier progress in economic diversification has enhanced its capacity to withstand headwinds from the conflict in the Middle East
Under our baseline scenario that assumes that the conflict subsides by April, GDP growth should moderate to a still solid 2.8% in FY:26 from 3.9% in FY:25
The balance of risks to the outlook remains tilted to the downside, should the conflict prove more protracted and disruptions persist
Cyprus’s strong fiscal position provides policy space to cushion the impact of potential shocks

BULGARIA
Despite a new bout of political uncertainty, the economy ended the year on a strong footing, with FY:25 GDP growth reaching 3.1%, compared with 3.4% in FY:24
GDP growth is seen consolidating at 2.9% in FY:26, reflecting spillovers from the ongoing conflict in the Middle East, with risks remaining tilted to the downside 
Strong prospects for Government formation after the forthcoming snap election -- the 8th since 2021 -- though risks remain

TÜRKIYE
The surge in global oil prices following the escalation of tensions in the Middle East prompted the CBRT to tighten its stance, given the already slow pace of disinflation
Fragile external buffers underscore the need for the CBRT to maintain a tightening bias, at least in the short term

APPENDIX:
DETAILED MACROECONOMIC DATA
REGIONAL SNAPSHOT:  
        MACROECONOMIC INDICATORS