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 2.3% in 2018, following 2017’s robust growth. The 2017 rates of growth of GDP (2.7 percent) and private consumption (2.5 percent) were faster than at any time since the global financial crisis of a decade ago. Growth was especially strong in Central Europe and in Turkey, but it was robust in other parts of the region as well.
Unemployment rates are now close to their 2007 levels in most countries, and average inflation exceeds 2 percent, indicating that little spare capacity is left. Deceleration of growth is expected to be modest, but a sharper correction remains possible.
There is little room for further monetary stimulus if the expected slowdown is sharper than expected. The region has rebuilt some fiscal buffers, however. The average fiscal deficit in 2017 is estimated at just above 1 percent of GDP, down from 6 percent during the 2009 crisis and close to levels at the end of the boom that preceded that crisis.
Fiscal stimulus is thus an option in several countries in case of a sharper than expected slowdown. Under the baseline scenario of only a modest deceleration, however, a further buildup of fiscal buffers seems the best strategy.
Last updated May, 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.