The World Bank in Europe and Central Asia

The Russian Federation’s war with Ukraine has triggered a catastrophic humanitarian crisis and threatened the stability of geopolitical relations. Economic output in the Europe and Central Asia region is forecast to contract by more than 4.1% in 2022—the second major shock and regional recession in two years. Moreover, the war has added to mounting concerns of a sharp global growth slowdown.

The economic impact of the conflict has reverberated through multiple global channels, including commodity and financial markets, trade and migration links, and confidence. Neighboring countries in the Europe and Central Asia region are likely to suffer considerable economic damage because of their strong trade, financial, and migration links with Ukraine and Russia.

Pandemic disruptions amid rising COVID-19 cases in some major economies have contributed to financial and commodity market volatility, and could ultimately weigh on global growth prospects. The war has also raised the likelihood of a destabilizing wave of refugees, widespread financial stresses among some emerging and developing economies, a de-anchoring of inflation expectations, and food insecurity. A protracted conflict is likely to heighten policy uncertainty and fragment global trade and investment networks.

Policy makers need to ensure that they are better prepared to handle future crises as part of a commitment to a comprehensive approach to bolster resilient, inclusive, and green development. They should fortify their macroeconomic policy buffers and institutions to strengthen stability; promote an inclusive and more equal recovery by strengthening their social protection systems to protect the most vulnerable, including the refugees; and keep their focus on improving energy efficiency and green transition to secure a sustainable future.

Regional Economic Update Spring 2022

Updated 10 April 2022

World Bank Regional Strategy

The World Bank Group works with countries in Europe and Central Asia to eliminate poverty and promote shared prosperity, through boosting human capital, enabling markets, facilitating green transitions, and building & strengthening institutions.

Boosting human capital for inclusive productivity in a world of changing work. This includes continuing to address near-term risks to human capital due to the COVID-19 crisis, including emergency health and social relief, while helping our clients to build adaptive and inclusive human capital through access to quality health, education, social protection services and jobs.

Enabling markets for the private sector to compete in the knowledge-intensive global economy. In addition to helping our clients reinvigorate private investment to support the crisis recovery, this means working to raise productivity and development of a competitive private sector through critical market reforms, public-private partnerships, financial sector diversification, productivity-enhancing digitization, and fintech to increase access to finance.

Facilitating green transitions to low-carbon, sustainable economies. We will help our clients with innovative engagements to support decarbonization, natural capital renewal, climate & disaster risk management, inclusive infrastructure, and just transitions.

Building and strengthening institutions to be open and responsive and to deliver quality services to people. In addition to continuing to work on long-standing issues as part of the crisis response and recovery, this means ensuring sound macro-financial policies & regulatory frameworks; debt management; strengthening institutions, governance & state effectiveness, including SOE reforms; and policy & institutional modernization to support infrastructure services.

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).

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.