Europe and Central Asia Overview

Overview

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Economy
Strategy
Results
Partners

GDP (current US$)

Growth in the emerging market and developing economies of Europe and Central Asia decelerated to 2.2 percent in 2019, reflecting weakness in the region’s two largest economies, Turkey and the Russian Federation. Earlier financial market stress resulted in a sharp growth slowdown in Turkey; activity in Russia was tepid amid weak demand and cuts in oil production.
In February 2020, the COVID-19 (coronavirus) outbreak interrupted the incipient recovery that was underway earlier in the year. Given the rapidly evolving situation, our latest Regional Economic Update summarizes the recent developments and growth outlook for the region under different scenarios regarding the outbreak. The report discusses the potential channels of transmission, provides estimates of spillovers, and emphasizes necessary policy responses.
The impact of the coronavirus pandemic on growth in the region will depend on how the outbreak evolves. If the outbreak is largely contained by the second half of the year and measures to stop the spread of the virus—including quarantines, travel restrictions, and international border closures—are lifted, economic activity could resume, supply chains could recover, and financial markets and commodity prices could stabilize.
However, if the virus spreads to most countries and efforts to contain the outbreak spill into the third quarter of 2020, financial market pressures continue, commodity prices remain weak, and domestic healthcare systems are strained, the growth impacts will be more severe. Either way, the region is bracing for a recession.
Although the magnitudes are uncertain, the pandemic is likely to derail the near-term outlook by interrupting daily activity, putting further downward pressure on commodity prices, disrupting tightly linked global and regional supply chains, reducing travel and tourist arrivals, and decreasing demand for exports from economies in the region.
There are trade-offs between the health benefits of policies to slow down the spread of the disease and the economic costs of these actions. During these difficult times, it is important for policy makers to act decisively to save lives and invest in their public health systems; but also minimize the economic cost by strengthening the safety net for the most vulnerable; supporting the private sector through short-term credit, tax breaks, or subsidies; and being prepared to lower interest rates and inject liquidity to restore financial stability and boost confidence.
Regional Economic Update Spring 2020
Updated 8 April 2020
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Learn more about how the World Bank Group is coordinating with partners to accelerate the international response and support countries to manage the global COVID-19 pandemic.
COVID-19 Response
As countries around the world work to contain the spread and impact of coronavirus (COVID-19), the World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response and health care systems.
The World Bank Group will deploy globally as much as $160 billion over the next 15 months, tailored to the health, economic and social shocks countries are facing. In addition to ongoing health support, operations will emphasize social protection, poverty alleviation and policy-based financing.
World Bank Group support will assess needs and prioritize the poorest countries, those with high risk and low capacity, and those in fragile and conflict settings. Our goal is to: protect the poorest and most vulnerable households; protect jobs and businesses; shorten the time to recovery; and support an economic recovery that is broad based and sustainable.
Find out more: World Bank Group and COVID-19 (coronavirus)
Long-Term Regional Strategy
The World Bank’s regional strategy for Europe and Central Asia focuses on three priority areas:
Boosting human capital to raise productivity, by investing in health care systems; improving skills; supporting the transition to new technologies; and investing in safety nets to protect poor households.
Building solid foundations and resilience for growth, by deepening macroeconomic and financial stability; developing effective governance and institutions; and building capacity to adapt to evolving threats, such as climate change.
Enabling markets to achieve high productivity in the private sector, by promoting entrepreneurship, competition, and innovation; facilitating access to new markets and technology; fostering regional economic integration; and participating in global value chains.
Updated: 8 April 2020
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.