After turbulent times, growth is stabilizing in Europe and Central Asia at around 1.8 percent. In the European Union a sustained, albeit modest, recovery has started to reduce unemployment and has pushed inflation into positive territory. In Eastern Europe the stabilization of oil prices at around $50 per barrel has provided some breathing room for governments that have begun adjusting policies to the lower level of oil prices.
Even if the economic headwinds abate, major challenges remain. The start of Brexit has thrown the European Union into unchartered territory. In the eastern part of the region low oil prices have threatened the financial system in virtually all countries, from Belarus to Tajikistan and many countries in between.
Equally important challenges have arisen from structural changes in the global economy. New specialization patterns are emerging. New technologies are changing production methods and are upending traditional labor market relations. As most economies in the Europe and Central Asia region will have to facilitate a shift from non-tradable production to internationally competitive tradable production, they will have to navigate these new realities.
Last updated April 2017