Economic growth in the developing economies of Europe and Central Asia is stabilizing after recent crises, according to the World Bank's Economic Update for the region. The report, released today, indicates that regional growth is expected to moderate to 3.3% this year from 3.5% in 2023, with a further slowdown to 2.6% anticipated in 2025.
The current growth rates are significantly weaker than the average of 5.1% experienced between 2000 and 2009. These figures fall short of what is necessary for middle-income countries in the region to achieve high-income status within a generation or two. Although lower inflation has led some central banks to reduce policy rates this year, there remains caution due to ongoing price pressures.
The report emphasizes the need for an overhaul of education systems across the region, particularly higher education, as a means to unlock human talent and boost economic growth. "Countries of the Europe and Central Asia region have ably navigated the recent shocks," said Antonella Bassani, World Bank Vice President for Europe and Central Asia. She highlighted that improving secondary and higher education quality is crucial for bolstering human capital.
Private consumption continues to support economic growth in these regions due to rising wages, government transfers, and falling inflation. Remittance inflows remain above pre-pandemic levels, aiding expansion in areas like the Western Balkans and Central Asia.
Tourism has been a positive factor in regional growth, with international tourist arrivals exceeding pre-pandemic numbers. Türkiye reported nearly a 30% increase in tourist arrivals during the first half of this year compared to similar periods before COVID-19. However, recovery in goods exports has slowed due to decreased demand from the European Union.
In Ukraine, damage from Russia's invasion coupled with electricity disruptions are expected to reduce growth from last year's rate of 5.3% down to 3.2% this year and further decrease it by 2025. In Russia itself, tighter monetary policies are projected to slow growth from last year's figure of 3.6%.
Türkiye's economy is also experiencing slower growth at an estimated rate of 3.2%, down from last year's rate of 5.1%. This decline results from rebalancing efforts within its economy away from consumption-led expansion towards more normalized fiscal policies.
A special analysis within the report points out deteriorating education quality at a time when many countries face demographic challenges such as aging populations and low labor force participation rates among women.
"The greatest scope for boosting long-term growth lies in raising education quality," stated Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia.
Despite high enrollment rates across all educational levels throughout these regions—issues persist regarding declining test scores on assessments like PISA over recent years—and disparities exist particularly affecting students coming from disadvantaged backgrounds who suffer most acutely under poor-quality basic (primary/secondary) schooling conditions which ultimately impact their access/opportunities related tertiary/higher learning environments too; indeed other global counterparts having comparable income/basic schooling standards outperform them institutionally speaking per Times Higher Education rankings where only nine institutions make top five hundred list globally speaking according current data available now...
Addressing weaknesses found within higher educational systems requires accelerating curriculum reforms especially around STEM subjects while improving overall institutional management practices including better aligning graduate outcomes against evolving labor market needs thus ensuring future generations possess requisite skills needed succeed amidst changing socio-economic landscapes worldwide going forward into next decade beyond today's horizon line!