Shifting priorities, building for the future in emerging Europe and Central Asia

16:25, 16 June 2014

ASTANA. KAZINFORM Global Economic Prospects is a World Bank Group flagship report which twice yearly examines growth trends for the global economy and how they affect developing countries. The reports include three-year forecasts for the global economy and individual developing countries and regions.

Europe and Central Asia - Overview A modest recovery in the developing Europe and Central Asia region remained on track in the first quarter of 2014, despite headwinds from global financial turbulence since late January. Industrial output accelerated to an annualized rate of 12 percent in March in the developing Central and Eastern Europe sub-region, notably Hungary and Romania, helped by rising exports to the Euro Area. In Turkey, industrial output continued to expand in the first three months of the year, helped by strong export growth. But momentum has slowed and weakening business and consumer confidence point to softening domestic demand ahead. In addition, higher inflation and past currency weakness are constraining private consumption and investment. Among the developing Commonwealth of Independent States (CIS), slowdown in key trading partners, geopolitical tensions, declining metal and mineral prices and domestic capacity constraints have slowed growth in 2014. Growth in Kazakhstan and Azerbaijan moderated with new delays in bringing additional oil production capacity on-stream. Outlook The outlook for the developing Europe and Central Asia region has weakened in the near term, owing to a sharper-than-expected slowdown in a number of large economies in the region, including Turkey, Kazakhstan, and Ukraine. Growth in the region is expected to temporarily weaken to 2.4 percent in 2014 before picking up to 3.7 and 4.0 percent in 2015 and 2016, respectively. While most developing countries in the Central and Eastern Europe sub-region are expected to see strengthening in growth this year as they continue to benefit from stronger import demand from the Euro Area, Turkey remains vulnerable to domestic and external shocks, including higher inflation, political uncertainty, and tighter global financial conditions. For the developing CIS, a marked slowdown is expected this year, reflecting weaker revised forecast for Kazakhstan and Ukraine, as well as broader spillovers from the slowdown in Russia and China, the largest trading and investment partners, and a weakening trend in key commodity prices.

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