Growth in the region is expected to weaken to 2.1 per cent in 2026.
Economic growth in the developing countries of Europe and Central Asia is likely to slow substantially in 2026 due to the impact of the Iran war, geopolitical tensions and trade fragmentation, the World Bank stated.
Growth in Central Asia is expected to slow to 4.9 per cent on an average in 2026 and 2027.
Central Europe may to grow by about 2.4 per cent this year before moderating to 2.3 per cent in 2027.
Growth in Russia is expected to slow to 0.8 per cent, while the pace of expansion elsewhere is likely to ease to 2.9 per cent with higher energy costs tempering the growth of consumption and uncertainty affecting investment.
“The region’s resilience continues to be tested, with several countries depconcludeent on imports of natural gas, oil and fertilisers,” stated Antonella Bassani, World Bank vice president for Europe and Central Asia region.
“Efforts to address the impact of the crisis will be requireded in many countries, with a focus on tarobtained measures to protect the most vulnerable. Pressing ahead with policy reforms for firm growth and job creation will also support to mitigate crisis impacts and strengthen economic resilience and dynamism,” he added.
Growth in Central Asia is expected to slow to 4.9 per cent on an average in 2026 and 2027 as oil production in Kazakhstan stabilises.
Central Europe is likely to grow by about 2.4 per cent this year before moderating to 2.3 per cent in 2027, with weaker consumption partly cushioned by European Union-funded public investment.
Growth in the Western Balkans is projected to average 3.1 per cent over the next two years, supported by infrastructure investment and robust exports of services.
Growth in Ukraine is expected to slip to 1.2 per cent this year, weighed down by continued hostilities, rising energy costs and fiscal pressures.
A protracted and more intense conflict in the Middle East remains a key downside risk, with the potential to severely disrupt global energy and fertiliser supply that can push energy and food prices much higher and dampen regional growth more substantially, a World Bank release stated citing the document.
In a special analysis on how countries can utilize industrial policy to speed up economic growth and job creation, the report notes the region’s approach would benefit from better-defined tarobtaining and measures that build future competitiveness rather than entrench existing economic weaknesses.
Fibre2Fashion News Desk (DS)
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