Europe's development bank said today its outlook for the regions it covers had weakened slightly owing to ultra-low oil prices, markets volatility and international tensions.
The European Bank for Reconstruction and Development (EBRD) gave the assessment for its 36-nation investment zone on the first day of its annual meeting in London, where it is headquartered.
The bank's investment zone is comprised of countries in eastern Europe, central Asia and the Mediterranean.
The 25-year-old bank's governing council will also today vote on its president for the next four years.
Sources close to the matter said that Britain's Suma Chakrabarti - who has held the position since 2012 - is set to be re-elected.
He is standing against Marek Belka, the outgoing governor of Poland's central bank.
Over the last quarter of a century the EBRD has invested more than €105 billion in over 4,500 projects.
The EBRD today forecast that average economic growth in its investment zone would stand at 1.4% in 2016. That was modestly below its prior November guidance for 1.6% expansion.
The performance would still mark a strong acceleration from the 0.5% experienced in 2015, and will be followed by an estimated 2.5% growth in 2017.
"The slightly softer outlook reflects a further drop in the price of oil since the previous report, increased volatility in global financial markets, lower capital flows to emerging markets worldwide, weakness in global trade and increasing geopolitical tensions," the bank said in a statement.
The EBRD also highlighted "elevated" geopolitical risks, particularly in the Middle East and eastern Ukraine.
However, acting chief economist Hans Peter Lankes warned that the 2016 forecast downgrade "masked a divided picture".
The Eastern Europe and the Caucasus area - which includes countries like Armenia, Belarus and Montenegro - was set to shrink by 0.2% this year. That contrasted sharply with the previous forecast of 1.4% growth.
This region, along with central Asia, has been hit hard by "weak commodity prices and the recession in Russia", the EBRD said.
The Mediterranean nations - comprising Egypt, Jordan, Morocco and Tunisia - were revised sharply down to 2.9% growth in 2016 from 4.1% previously.
"Weaker tourism receipts partly due to security concerns and the slowdown in global trade are clouding the outlook in southern and eastern Mediterranean, as well as Turkey," the bank said.
However, the EBRD's other regions - central Europe and the Baltics, and southeastern Europe - saw their prospects improve on the back of lower energy costs and accommodative monetary policy in the neighbouring euro zone.
The bank, which invests in private enterprises together with commercial partners, was founded in 1991 to help ex-Soviet bloc countries make the transition to free-market economies and democracy.
It has expanded its reach in recent years to Turkey, Jordan and north Africa.
