IMF Sees Soft Landing for Global Economy, But Weak Growth Ahead as Trade Barriers Rise
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Oct. 17, 2024 10:21 am ET
WASHINGTON, October 17, 2024 – Economic growth in countries Europe and Central Asiadeveloping stabilizes after a series of crises, but at a much lower level than in the early 2000s, according to the World Bank's Economic Review for the Region, published today.
Growth rates in the region are expected to slow to 3.3 percent this year from 3.5 percent in 2023, and in 2025 there will be a further decline to 2.6 percent. This figure is significantly lower than the average growth of 5.1 percent in 2000-2009, and lower than the countries of the middle-income region need to achieve the status of high-income countries in one or two generations. Lower inflation is prompting some central banks to lower their discount rates this year. However, caution in politics prevails amid concerns about constant price pressures.
«The countries of Europe and Central Asia have successfully overcome the recent shocks associated with high inflation, the effects of Russia's invasion of Ukraine and the slow increase in economic activity in the European Union, the region's key export market », - noted Antonella Bassani, World Bank Vice President for Europe and Central Asia. «To accelerate productivity growth in the long run, countries in the region need to significantly improve the quality of secondary and higher education, which is a major factor in human capital development and innovation potential ».
- Currently, economic growth in Europe and Central Asia, developing countries, is supported by personal consumption through rising wages, government payments to households and slowing inflation.
- The inflow of remittances also exceeds the level it was before the pandemic, and
- it continues to promote economic growth in the Western Balkans, the South Caucasus and Central Asia.
- In Ukraine, significant losses from the Russian invasion and large-scale power outages are likely to slow growth from 5.3 percent last year to 3.2 percent this year and 2 percent in 2025.
- Growth in Turkey, the region's second-largest economy after Russia, will slow to 3.2 percent this year from 5.1 percent in 2023 due to rebalancing economic development, which has grown through consumption and normalization of monetary and fiscal policies. Investment growth has also slowed sharply due to declining public investment, high borrowing costs and further declining construction activity.
Investment in education for human capital development and stimulating economic development
«In the long run, the greatest potential for accelerating the region's economic development is to improve the quality of education, especially higher », he said Ivailo Izvorski, the World Bank's chief economist in Europe and Central Asia. «Prioritizing the quality of education and promoting lifelong learning will help countries strengthen their human capital, reduce inefficient distribution and loss of skilled workers, intensify innovation and promote sustainable economic growth and development ».
The report notes that the whole region is characterized by a broad coverage of the population at all levels of education.
Higher education shows even worse results than basic education. Countries in other regions - with a similar quality of basic education or a similar level of income - have stronger universities. For example, the Top 500 Times Higher Education ranking includes only nine institutions in the region.
Weaknesses in higher education systems are outdated curricula, lack of investment in equipment and infrastructure, inefficient management and the mismatch between education and labor market needs.
Forecast in terms of countries in the region of Europe and Central Asia | ||||||
(Growth of real GDP in market prices as a percentage, unless otherwise indicated) | ||||||
Country | 2021 | 2022 | 2023 | 2024e | 2025f | 2026f |
Albania | 8.9 | 4.9 | 3.4 | 3 ,3 | 3.4 | 3.4 |
Armenia | 5.8 | 12.6 | 8 ,3 | 5.5 | 5.0 | 4.6 |
Azerbaijan | 5.6 | 4.6 | 1 ,1 | 3.2 | 2.7 | 2.4 |
Belarus | 2.4 | -4 .7 | 3.9 | 4.0 | 1 .2 | 0 .8 |
Bosnia and Herzegovina | 7.3 | 3 .8 | 1 .6 | 2.8 | 3.2 | 3.9 |
Bulgaria | 7.7 | 3.9 | 1 .8 | 2.2 | 2.8 | 2.7 |
Croatia | 13.0 | 7.0 | 3.1 | 3.5 | 3.0 | 2.8 |
Georgia | 10.6 | 11.0 | 7.5 | 7.5 | 5.2 | 5.0 |
Kazakhstan | 4.3 | 3.2 | 5.1 | 3.4 | 4.7 | 3.5 |
Kosovo | 10,7 | 4.3 | 3 ,3 | 3 .8 | 3.9 | 4.0 |
Kyrgyz Republic | 5.5 | 9.0 | 6.2 | 5.8 | 4.5 | 4.5 |
Moldova | 13.9 | -4 .6 | 0 .7 | 2.8 | 3.9 | 4.5 |
Montenegro | 13.0 | 6.4 | 6 ,3 | 3.4 | 3.5 | 3.2 |
Northern Macedonia | 4.5 | 2.2 | 1.0 | 1 .8 | 2.5 | 3.0 |
Poland | 6.9 | 5.6 | 0.2 | 3.2 | 3 .7 | 3.4 |
Romania | 5 .7 | 4.1 | 2.1 | 2.0 | 2.7 | 3.5 |
Russian Federation | 5.9 | -1 ,2 | 3.6 | 3.2 | 1 .6 | 1 ,1 |
Serbia | 7.7 | 2.5 | 2.5 | 3 .8 | 4.2 | 4.0 |
Tajikistan | 9.4 | 8.0 | 8 ,3 | 7.2 | 5.5 | 5.0 |
Turkey | 11,4 | 5.5 | 5.1 | 3.2 | 2.6 | 3 .8 |
Ukraine | 3.4 | -28,8 | 5 .3 | 3.2 | 2.0 | 7.0 |
Uzbekistan | 8.0 | 6.0 | 6 ,3 | 6.0 | 5.8 | 5.9 |
Source: World Bank. | ||||||
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