Global Economic Prospects:
June 2024

Europe and Central Asia

Recent developments: Growth in Europe and Central Asia (ECA) strengthened to 3.2 percent in 2023,
primarily reflecting a shift from contraction to expansion in the Russian Federation and Ukraine and a morerobust recovery in Central Asia. The regional picture was mixed: growth in Türkiye slowed and activity inCentral Europe barely expanded, primarily reflecting stagnation in Poland due to falling real incomes, andamid spillovers from euro area weakness. High-frequency economic indicators, including manufacturing
purchasing managers’ indexes and retail sales, suggest a relatively resilient first quarter of 2024 in ECA’slargest economies—Russia, Türkiye, and Poland.
The region's median headline and core inflation fell about one-third of the levels prevailing a year earlier.
Monetary policy has shifted toward easing in most countries, with the notable exception of Türkiye. Realwages continued to rise markedly over the past six months, while the unemployment rate dropped to historiclows in the region.
Outlook: Growth in ECA is projected to decelerate to 3 percent in 2024, 2.9 percent in 2025, and 2.8
percent in 2026. The primary growth drivers in most countries are expected to be private consumption andinvestment—buoyed by the easing of monetary policies and decreasing inflation—and a recovery inexports, particularly as activity in the euro area firms. The slowdown this year is mainly attributed todecelerations in Russia and Türkiye.
Elevated uncertainty regarding the evolution of the invasion of Ukraine continues to play an essential rolein shaping the regional outlook. Excluding Russia, Türkiye, and Ukraine, growth in the region is expectedto accelerate to 3.1 percent this year and 3.6 percent on average in 2025–26, with growth picking up in
about half of ECA’s economies.
Inflation is expected to continue moderating, paving the way for more substantial monetary policy easing.
In April 2024, inflation was above official targets in about half of ECA countries, but market-based
expectations are consistent with inflation close to targets in most cases by 2025. Despite the need for fiscal
consolidation to ensure sustainability, prospects for significant fiscal adjustments in the region appear to belimited, amid many upcoming elections.
Risks: Risks to the outlook are tilted to the downside. Geopolitical tensions, particularly stemming from
Russia’s invasion of Ukraine, and the potential continued effects and risk of escalation of the invasion, cloud
prospects for ECA. Political uncertainty in the region is also heightened. An escalation of trade restrictions
could further hamper trade activity and weigh on growth, amid a deceleration in exports in recent years.
Additionally, a slower-than-expected recovery in China could adversely impact commodity exporters in theregion. Frequent or extreme weather events would also dampen growth prospects. Despite recentmoderation, inflation could be fueled by an escalation of conflict in the Middle East, which could increaseenergy prices and potentially feed back into core inflation, which remains sticky. More robust-than-expected
wage growth could also add to inflationary pressures. Conversely, a faster-than-expected decline ininflation, potentially driven by an easing of labor market pressures, represents a potential upside.

Download Global Economic Prospects: https://www.worldbank.org/gep

Europe and Central Asia Country Forecasts(Annual percent change unless indicated otherwise)

2021
2022
2023e
2024f
2025f
2026f
GDP at market prices (average 2010-19 US$)
Albania
8.9
4.9
3.3
3.3
3.4
3.5
Armenia
5.8
12.6
8.7
5.5
4.9
4.5
Azerbaijan
5.6
4.6
1.1
2.3
2.4
2.4
Belarus
2.4
-4.7
3.9
1.2
0.7
0.5
aBosnia and Herzegovina
7.4
4.2
1.7
2.6
3.3
4.0
Bulgaria
7.7
3.9
1.8
2.1
3.1
2.7
Croatia
13.0
7.0
3.1
3.0
2.8
2.7
Georgia
10.6
11.0
7.5
5.2
5.0
5.0
Kazakhstan
4.3
3.2
5.1
3.4
4.7
3.6
Kosovo
10.7
4.3
3.3
3.7
3.9
3.9
Kyrgyz Republic
5.5
9.0
6.2
4.5
4.2
4.0
Moldova
13.9
-4.6
0.7
2.2
3.9
4.5
Montenegro
13.0
6.4
6.0
3.4
2.8
3.0
North Macedonia
4.5
2.2
1.0
2.5
2.9
3.0
Poland
6.9
5.6
0.2
3.0
3.4
3.2
Romania
5.7
4.1
2.1
3.3
3.8
3.8
Russian Federation
5.9
-1.2
3.6
2.9
1.4
1.1
Serbia
7.7
2.5
2.5
3.5
3.8
4.0Tajikistan
9.4
8.0
8.3
6.5
4.5
4.5
Türkiye
11.4
5.5
4.5
3.0
3.6
4.3
Ukraine
3.4
-28.8
5.3
3.2
6.5
5.1
Uzbekistan
7.4
5.7
6.0
5.3
5.5
5.7
Source: World Bank.
Note: e = estimate; f = forecast. World Bank forecasts are frequently updated based on new information andchanging (global) circumstances. Consequently, projections presented here may differ from those contained inother Bank documents, even if basic assessments of countries’ prospects do not significantly differ at any given
moment in time. The World Bank is currently not publishing economic output, income, or growth data for
Turkmenistan owing to a lack of reliable data of adequate quality. Turkmenistan is excluded from cross-country
macroeconomic aggregates.
a. GDP growth rate at constant prices is based on production approach.