Economic growth in Europe and Central Asia is likely to moderate from 3.5 percent in 2023 to 3.3 percent this year. This is significantly weaker than the 4.1 percent average growth in 2000¨C19 and well below the level needed for the region¡¯s middle-income countries to reach high-income status. Growth this year is driven by expansionary fiscal policies and strong private consumption. External demand is less favorable because of weak economic expansion in major trading partners, like the European Union. Growth is likely to slow further in 2025, mostly because of the easing of expansion in the Russian Federation and T¨¹rkiye. To reinvigorate sluggish growth, governments need to unlock the creative power and human capital potential in their countries by reforming their education systems, especially higher education.
Economic activity in the Europe and Central Asia (ECA) region is expected to remain resilient but slow this year as a weaker global economy, slowdown in China, and lower commodity prices weigh on the region¡¯s growth outlook. Regional growth is likely to drop to 2.8 % in 2024, following substantial strengthening to 3.3 % last year because of a shift from contraction to expansion in the Russian Federation and war-hit Ukraine, and a more robust recovery in Central Asia. Slow growth further delays the region¡¯s recovery from the effects of past shocks and renewal of economic dynamism. To achieve stronger economic growth and overcome the middle-income trap, countries need to harness the private sector potential and focus on reforms fostering competition, free markets, education, and governance.
The impacts of climate change are profoundly affecting the Europe and Central Asia region. As a result of heavy reliance on fossil fuels and energy-intensive economies, the region¡¯s per capita carbon emissions are among the highest in the world. The clean energy transition will require massive private and public investment and a range of policies to ensure that investment is effective. Tailored policies based on country conditions would help place the region on a path of sustainable and greener long-term growth. These policies should account for the costs of implementation and the tradeoffs between immediate environmental objectives and long-term social benefits.
The Office of the Chief Economist provides guidance on strategic priorities and technical quality of economic analysis in the Europe and Central Asia region.
This mission is accomplished through an analytical program that challenges conventional wisdom, takes on new, topical and controversial issues, and provides cross-sectoral and region-wide analysis, and serving as principal regional spokesperson inside and outside the Bank on strategic and economic issues facing the region.
This ECA Talk discussed the recent comparative analysis of development paths and the nature of post-communist capitalism in 11 new EU member countries of Central and Eastern Europe between 2004 and 2023.
The ECA Academy identifies the best new policy-relevant research from across the World Bank Group on topics of interest to the region. Read more about the 2024 winning research
What are the economic developments and policies in Europe and Central Asia? What challenges lie ahead? Watch this event replay on how to harness the private sector's potential to accelerate growth in the region.
