Europe and Central Asia Overview

Overview

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Economy
Strategy
Results
Partners

GDP (current US$)

Economic Developments
GDP growth in the Europe and Central Asia region is forecast to moderate to 2.4 percent in 2018, from 2017’s robust 2.8 percent—the strongest since the financial crisis.
All parts of the region are expected to see growth, reflecting ongoing strength in industrial production and exports. Azerbaijan, Russia, Belarus and Ukraine are expected to see a modest acceleration in 2018. These countries were the hardest hit by the oil price fall and are still gaining momentum after sharp recessions in 2015 and 2016.
The region’s export growth continues to be strong, although the appreciation of the euro is expected to slow the acceleration of export volumes seen in 2017.
The stable outlook comes with a normalization of inflation and, in many countries, modest fiscal deficits. While some EU countries still face deflation, average EU inflation was up to 1.5 percent in 2017, and is expected to remain modest in 2018. The average fiscal deficit in 2018 is projected to be 1.1 percent of GDP, down from more than 6 percent in 2009.
Inflation has significantly dropped from double-digit rates seen in Russia and Kazakhstan during 2015-16, after the oil price shock and subsequent devaluations. This reflects the one-time adjustments in relative import prices at the time and not expansionary monetary policy.
Turkey, however, is still likely to see inflation above 10 percent, reflecting monetary tightening that has not kept pace with fiscal expansion and private sector credit growth.
In many countries, unemployment rates have fallen below pre-2008 levels, while labor participation rates are above pre-crisis levels.
Last updated March 30, 2018
The World Bank Group’s strategy for the region will support clients in eliminating poverty and boosting shared prosperity through increasing productivity and building resilience to shocks. Specifically, the World Bank Group will focus on:
Solid Foundations to enhance productivity and build resilience – macroeconomic and financial stability, effective governance and institutions, an enabling environment for private sector-led growth, and capacity to address global public goods, especially climate change.
Productive Individuals to overcome vulnerability and achieve a middle-class. Investing in maternal and child health to achieve potential, investing in safety nets to protect households during times of adversity, improving labor productivity and labor force participation to achieve higher incomes, fostering inclusion and engaged citizenry for shared prosperity.
Enabling Markets to achieve sustained and inclusive growth, support private sector growth, promote entrepreneurship, competition and innovation, facilitate access to new markets, foster regional economic integration, and participate in global value chains.
To date in Fiscal Year 2018, the Bank has approved $1.86 billion in lending to the region for 23 projects, including $1.59 billion in IBRD loans and $278 million in IDA commitments. The Bank has also signed 20 Reimbursable Advisory Services agreements with seven countries for a total of $25.1 million.
By June 30, the end of Fiscal Year 2018, the Bank will have approved $4.77 billion in lending to the region for 45 projects, including $3.67 billion in IBRD loans and $1.1 billion in IDA commitments.
Results
We work with client countries to fight poverty and boost shared prosperity by helping them build more responsible institutions, increase private investment, improve service delivery, upgrade infrastructure, protect the environment, support human development, and empower marginalized groups.
In order to deliver integrated solutions that help countries address their development challenges, we regularly look at where we are achieving results and making an impact. By measuring and monitoring those results, we can then improve the way we support our clients and achieve better development outcomes.
Find out more about our results in Europe and Central Asia.
Reimbursable Advisory Services (RAS)
Middle-income countries interested in highly specific knowledge services that exceed what the Bank can finance from its own resources are increasingly accessing Bank technical expertise using Reimbursable Advisory Services (RAS).
Find out more about Reimbursable Advisory Services.
Analytical Work Highlights
In addition to its financial products and RASs, the Bank produces important research about critical issues in the region. Through its analytical work, the World Bank aims to bring global knowledge and adapt it to the needs of ECA countries.
Find out more about our publications and research on Europe and Central Asia.
European Union, European Commission, and other institutions
The World Bank’s ECA region has a strategic partnership with the European Union (EU), and is working with the European Commission (EC) and European international financial institutions (IFIs) to improve the capacity of ECA’s EU-member clients to absorb EU funds.
The Bank works closely together with EU institutions, European IFIs (European Investment Bank [EIB] and the European Bank for Reconstruction and Development [EBRD]), and the International Monetary Fund (IMF) as part of the second Vienna Initiative, which aims to improve banking systems and coordination among banking regulators in EU and non-EU countries.
The World Bank Group, the EBRD, and the EIB Group came together in November 2012 for a new Joint International Financial Institution (IFI) Action Plan. One of the most important priorities under the Action Plan was to ensure continued financing for SMEs that are key drivers of innovation and job creation in the region.
ECA works on Roma inclusion across the region in collaboration with various partners, including the European Commission, the Roma Education Fund, and a variety of national Roma agencies.
The Bank is also working with the EurAsian Economic Community’s (EURASEC) Anti-Crisis Fund and with the Eurasian Development Bank to provide parallel financing for low-income ECA countries.