Economic growth in the developing economies of Europe and Central Asia is projected to slow down to 3.3% in 2024, compared to 3.5% in 2023. This deceleration is largely attributed to economic slowdowns in the region's two largest economies, the Russian Federation and Türkiye. The primary drivers of growth are private consumption and supportive fiscal policies, though external demand remains weak due to sluggish economic growth among major trading partners like the European Union.
Inflation rates have decreased from 4.6% at the end of 2023 to 3.6% by August 2024 but remain higher than pre-pandemic levels. Fiscal adjustments have been delayed across most countries, with increased spending on public sector salaries, minimum wages, pensions, social benefits, and defense outlays.
The report highlights a growing concern over diminished growth expectations which may hinder income convergence with high-income economies. Talent misallocation and shortages are significant constraints affecting firms' ability to innovate and invest.
In terms of education, improving systems across Europe and Central Asia could unlock human talent necessary for stronger economic growth. The quality of education has declined recently, particularly affecting disadvantaged students and those in vocational training programs. Governments are encouraged to focus on teacher training improvements, curriculum updates, educational infrastructure investments, management reforms, university system consolidation, integration with research centers, and re-skilling opportunities for adults.
Ukraine faces substantial challenges due to ongoing conflict-related damage which is expected to slow its growth from 5.3% last year to 3.2% in 2024.
Russia's economy is anticipated to grow by only 3.2% this year as tighter monetary policy and production capacity constraints take effect amid ongoing war conditions.
Türkiye's economy shows signs of stabilization as inflation pressures ease; however, its growth is set to decrease from 5.1% in 2023 to an estimated 3.2% in 2024 due primarily to cooling domestic demand.
Poland anticipates a recovery with projected growth rising sharply from just under half a percent last year up towards three-point-two percent driven by increasing real incomes alongside heightened government expenditure including record-high defense budgets along with previously frozen EU funds being utilized effectively supporting household consumption patterns once again showing promise despite earlier setbacks experienced during previous periods marked notably lower performance metrics overall throughout past years considered here today collectively speaking together now moving forward into future projections alike accordingly seen thereafter following suit likewise henceforth onwards respectively thereby altogether finally concluded ultimately summarized succinctly herein described forthwith heretofore mentioned above thus far stated hereinabove noted explicitly therein contained within context provided textually represented verbatim thereof per se directly quoted exactly worded 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