LONDON, May 15 Reuters Two wars and high borrowing costs have trimmed expected growth in countries covered by the European Bank for Reconstruction and Development EBRD, the bank said in a semiannual report released on Wednesday.

The EBRD, which covers economic trends across emerging Europe, central Asia, the Middle East and Africa, still expects economic growth of 3 across the 40 or so countries it covers, above 2.5 in 2023.

But that forecast is 0.2 percentage points lower than in its September report.

This year is going to be better. But of course there is a lot of uncertainty, EBRD Chief Economist Beata Javorcik told Reuters.

The sad news is that our countries of operation are now affected by a fallout of not one, but two wars the war in Ukraine and the war in Gaza.

The downward revision is due in part to slowerthanexpected growth in central Europe and the Baltic states, a knockon effect from Germany39;s weak growth.

Gaza spillovers and slowing reform progress in Egypt are also hindering economic expansion in the southern and eastern Mediterranean, the EBRD said, lowering projected growth there to 3.4 in 2024 and 3.9 in 2025.

Egypt39;s Suez Canal revenue has fallen, while a drop in tourism to Lebanon and Jordan may prove lasting, the bank said.

Meanwhile, geopolitical shifts are impacting investment flows, with China39;s share of foreign direct investment into EBRD regions spiking to 39 in 2023 from less than 10 in 2022 with Egypt, Morocco and Serbia…