Europe & Central Asia's EMDEs' growth forecast at 2.4% in 2023

Additionally, Turkiye showcased consumer resilience, and Russia's growth surpassed expectations. Without factoring in Russia and Ukraine, the region's output is predicted to rise by 3 per cent in 2023. However, this growth still trails behind the long-term pre-pandemic averages, with numerous countries in the region expected to have stagnant or slower growth in 2023 compared to the previous year, as per the World Bank.

Looking ahead, the EMDEs’ growth rate for 2024-25 is set at an annual 2.6 per cent. This is influenced by a subdued expansion in the European Union (EU)—the region’s major trade partner—compounded with high inflation, stringent financial conditions, and the repercussions of Russia’s incursion into Ukraine. The World Bank's report underscores the prevailing downside risks in the region. Among the key challenges are the looming threat of protracted high inflation, triggered by volatile global commodity markets and surging energy prices. Additionally, a tightening financial landscape might introduce further volatility into global financial markets.

Delving into country-specific data, Ukraine's economy is forecast to grow by 3.5 per cent in 2023, marking a recovery from a steep 29.1 per cent dip in 2022, which occurred in the wake of Russia's invasion. This positive trajectory in Ukraine is driven by factors including a stable electricity supply, heightened government spending, consistent donor support, and some exports rerouting via the country’s western frontiers.

Turkiye's economy, on the other hand, is pegged to grow by 4.2 per cent in 2023, buoyed by diminished policy uncertainties and a strong consumer sector. However, growth might taper to an average of 3.5 per cent during 2024 and 2025 due to increasing interest rates and a cautious approach to fiscal consolidation. Russia is projected to witness a growth of 1.6 per cent in 2023, propelled by significant government expenditure and unwavering consumer demand. Yet, the subsequent years could see a downward trend with growth rates of 1.3 per cent and 0.9 per cent in 2024 and 2025, respectively.

Central Asia offers a more optimistic picture, with growth projected to surge to 4.8 per cent this year and hovering around an average of 4.7 per cent for the following two years, provided inflation remains under control. Conversely, the Western Balkans may experience a dip in growth to 2.5 per cent this year, with prospects of it rebounding to 3.3 per cent in both 2024 and 2025. This ebb and flow are influenced by inflation control measures, a steady revival in exports, and increased public expenditure on infrastructure projects backed by donors. It's noteworthy that in 2023, nations like Albania, Kosovo, and Montenegro managed to uphold robust consumption trends, while others, including Bosnia and Herzegovina, North Macedonia, and Serbia, grappled with weaker export demands primarily from the EU.

Further accentuating the region's economic dynamics, Central Asia and the South Caucasus are benefitting from bolstered trade and augmented inflows of resources and manpower. Countries such as Armenia, Georgia, and Tajikistan have emerged as the top growth performers in the region for the second consecutive year.

Fibre2Fashion News Desk (DP)