Economic growth in the Europe and Central Asia region is anticipated to decline, according to the World Bank's latest Economic Update released today. The report projects regional growth to be 2.5% in 2025-26, influenced by weaker external demand and a slowdown in Russia.
In 2024, the region saw growth stabilize at 3.6%, supported by private consumption and increased consumer borrowing, offsetting weaker external demand from the European Union. Inflation in the region rose to 5% year-on-year by February 2025, prompting central banks to adjust policy rates.
“While countries of the Europe and Central Asia region were able to maintain steady growth last year, global uncertainty, geoeconomic fragmentation and weak expansion among key trading partners are making it more challenging to sustain this growth,” said Antonella Bassani, World Bank Vice President for Europe and Central Asia. Bassani emphasized the need for domestic structural reforms to foster a dynamic private sector, entrepreneurship, and technology adoption.
Central Asia is expected to remain the fastest-growing area with growth forecasted at 4.7% for 2025-26. The South Caucasus is projected to average 3.5% growth over the same period. Growth in Central Europe is anticipated to slightly improve to 2.7%, while Russia is expected to experience a decline to 1.3% in 2025-26. Growth in Türkiye may modestly rise to 3.3%, remaining below its long-term trend.
The report highlights the importance of a robust private sector for economic growth in challenging global conditions. According to Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia, “Innovation and experimentation in business are essential for boosting productivity and a prerequisite for achieving and sustaining high-income status.”
Developing economies in the region are encouraged to invest in young, innovative companies and focus on enhancing access to finance. Strengthening competition and enabling business dynamism is deemed crucial for economic growth. The report also stresses the necessity of investing in human capital to attract skilled workers and entrepreneurs.
The World Bank's forecast and estimates, updated until April 10, 2025, provide detailed projections for individual countries' GDP growth up to 2026, reflecting the varying economic trends across the region.
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