World Bank Projects 2.5% Growth for Europe and Central Asia by 2025
Economic Growth Forecast for Europe and Central Asia: Insights from the World Bank
ASTANA – The World Bank’s latest Economic Update, released on April 23, projects that economic growth in the developing economies of Europe and Central Asia will hover at 2.5% for the years 2025-26. This outlook reflects concerns over weaker external demand and a deceleration in growth within Russia.
In 2024, the region experienced a stabilization in growth at 3.6%, as bolstered private consumption offset muted external factors. Key drivers included robust real wage increases, heightened remittances, and an expansion in consumer borrowing, addressing the challenges posed by tepid growth in the European Union.
However, rising prices for food and services have pushed inflation upwards, reaching 5% year-on-year by February 2025, a rise from 3.6% in mid-2024. In response to inflationary pressures, several central banks opted to raise policy rates or postponed previously planned easing measures.
Central Asia is anticipated to remain the fastest-growing sub-region through 2025-26, although growth is predicted to ease to 4.7%. This slowdown is largely attributed to a decline in Kazakhstan’s oil sector, reduced export levels, and a normalization of remittance inflows.
Antonella Bassani, the World Bank Vice President for Europe and Central Asia, underscored the growing challenges in maintaining steady growth amidst global uncertainties, geoeconomic fragmentation, and weaker expansion among critical trading partners.
“To achieve stronger economic expansion over the long term, it is essential for countries in the region to accelerate domestic structural reforms that foster a dynamic and innovative private sector along with entrepreneurship and technology adoption,” Bassani emphasized.
The report highlights the urgency for regional countries to boost innovation, support emerging companies, deepen financial markets, and enhance investments in research and development to secure sustainable economic growth in the future.
As the region navigates through these economic challenges, the importance of strategic reforms and innovation will be pivotal in ensuring a resilient and adaptive economy.
