The growth in the region, which was significantly impacted by the pandemic and Russia’s invasion, is expected to rebound to 2.7 percent annually between 2024 and 2025. The recovery is set to be driven by robust external and domestic demand and an expected easing of adverse growth shocks. Growth disparities within the region are expected to fade as migrant and capital flows from Russia decrease and the European Union’s (EU) economic growth improves, as per the Global Economic Prospects report by the World Bank.
Growth in the Europe and Central Asia (ECA) region is expected to see a modest rise of 1.4 percent in 2023, according to a report by World Bank. However, the outlook remains particularly uncertain owing to Russia’s invasion of Ukraine and its repercussions.
Excluding Russia and Ukraine, ECA’s growth rate could almost halve to 2.4 percent in 2023. An upward revision for Russia accounts for the 1.3 percentage points forecast upgrade for the region since January.
In 2022, ECA’s growth plummeted to 1.2 percent, making it the slowest growing among the six emerging market and developing economy (EMDE) regions. Even without Russia and Ukraine, the region’s growth weakened to 4.8 percent. This slowing growth was observed in most of the region’s economies, a consequence of Ukraine’s invasion, dwindling business and consumer confidence, soaring inflation, significant monetary tightening, and disruptions to energy supplies.
Notably, Eastern Europe saw a contraction of 20.2 percent in 2022, predominantly in Ukraine. Central Europe and the Western Balkans, both more integrated into EU value chains, faced slowed growth due to sharp energy price increases, supply disruptions, and tighter monetary policy. In contrast, the South Caucasus and Turkey witnessed accelerated growth, supported by trade, migrant, and finance inflows from Russia and Ukraine, factors that also boosted growth in Central Asia.
Europe & Central Asia region forecast to grow 1.4% in 2023: World Bank
