Economic Growth in Europe and Central Asia
The economic growth in Europe and Central Asia (ECA) is slowing down, but it remains resilient despite global and regional challenges. According to the World Bank’s latest report, the region’s GDP growth is projected to be 2.4% in real terms this year, which is lower than the 3.7% growth in 2024. The main reason for this slowdown is the weaker growth in Russia.
Regional Growth Trends
If we exclude Russia, which accounts for about 40% of the region’s total economic output, the growth is expected to remain steady at approximately 3.3% in both 2025 and 2026. This shows that the region’s economy is diverse and can withstand challenges from individual countries. Central Asia remains the fastest-growing subregion for the third consecutive year, with growth expected to rise from 5.7% in 2024 to 5.9% in 2025.
Strong Performing Countries
Some countries in the region are performing well, with Turkey and Poland being highlighted for their strong growth rates of 3.5% and 3.2%, respectively. This growth is supported by solid consumer demand and capital investment. The World Bank attributes the growth in Central Asia to increased oil production in Kazakhstan, higher remittance inflows, and rising public and private investment.
Challenges in the Labor Market
Despite the positive growth trends, the World Bank warns that sluggish growth and weak reform momentum are exacerbating challenges in the labor market. While employment across the ECA region has expanded by 12% over the past 15 years, many of the new jobs are low-skilled and offer limited income potential. Demographic shifts also pose a challenge, with the region’s working-age population projected to shrink by 17 million in the coming decades.
Demographic Challenges
The demographic shifts vary across the region, with Eastern and Central Europe and the Western Balkans expected to see a decline in population, while Central Asia and Turkey are expected to see population growth. This intensifies the need to generate sufficient employment opportunities in these regions. The World Bank recommends that countries invest in infrastructure, education, and private-sector development to improve productivity.
Future Opportunities
The report highlights several sectors that could drive economic growth in Central Asia, including agrifood and livestock processing, transport and logistics along Eurasian trade corridors, renewable energy investment, and tourism development. These sectors, supported by the region’s cultural and natural heritage, could help position Central Asia as one of the world’s most dynamic emerging markets.
Conclusion
In conclusion, the economic growth in Europe and Central Asia is slowing down, but it remains resilient. The region has diverse economies, with some countries performing well, while others face challenges. To boost growth and productivity, countries need to invest in infrastructure, education, and private-sector development. By doing so, they can create quality employment opportunities and address demographic changes, ultimately driving economic growth and prosperity in the region.
