Europe and Central Asia Overview

Overview

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Economy
Strategy
Results
Partners

GDP (current US$)

Recent Developments
Growth in Europe and Central Asia is estimated to have slowed to 1.6% in 2019, a four-year low, partly reflecting a sharp weakening of activity in Turkey. Trade continues to weaken across the region, as goods trade volumes have slowed in parallel with sluggish activity in the Euro Area, the region’s largest export destination.
Monetary policy tightening has paused in the region and fiscal policy has loosened in 2019. Inflation has been trending up in some of the larger economies in the region since the start of the year, notably in Hungary, Poland, and Russia, driven in part by rising oil prices.
Industrial activity in Russia slowed at the start of 2019, as compliance with agreed-upon oil production cuts took effect. Russia is estimated to slow to 1.2% growth this year. Turkey, which experienced sharp declines in investment and private consumption from acute financial pressure in the second half of last year, is projected to contract by 1% in 2019.
Poland is expected to moderate to 4% growth this year even as subdued inflation and interest rates enable authorities to undertake accommodative monetary and fiscal policies.
Outlook
Regional growth is expected to firm to 2.7% in 2020 as Turkey recovers from a sharp growth slowdown. Excluding Turkey, regional growth is expected to moderate to 2.6%, with modest growth in domestic demand and a small drag from net exports.
In Central Europe, fiscal stimulus and the resulting boost to private consumption will begin to fade in some of the subregion’s largest economies, including Hungary, Poland, and Romania, by 2020. The subregion is expected to slow to 3.3% next year from 3.7% in 2019. Growth is expected to modestly recover to 2.7% in Eastern Europe and moderate to 4% in Central Asia in 2020.
Read More: Global Economic Prospects - June 4, 2019 (PDF)
The World Bank’s regional strategy for Europe and Central Asia seeks to strengthen productivity and resilience through solid foundations, enabling markets, and productive individuals:
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 adapt to evolving threats such as climate change.
Enabling Markets – To achieve sustained and inclusive growth – supporting private sector growth, promoting entrepreneurship, competition and innovation, facilitating access to new markets and technology, fostering regional economic integration, and participating in global value chains.
Productive Individuals – To overcome vulnerability and achieve a middle-class – investing in maternal and child health, and in safety nets to protect households in adversity, supporting the transition to the technology age, improving labor productivity and labor force participation for higher incomes, fostering inclusion, and engaging citizenry for shared prosperity.
World Bank Assistance and Support
The World Bank approved $4.5 billion in lending to the region for 37 projects in fiscal year 2018, including $3.6 billion in IBRD loans and $1 billion in IDA commitments.
The Bank also signed 35 Reimbursable Advisory Services agreements with 11 countries for a total of $74.9 million. These agreements provided technical advice on issues such as public finance and fiscal reforms, urban planning and development, and strengthening education and skills for employment.
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.