Economic growth in developing economies in the Europe and Central Asia (ECA) region is likely to slow, but Romania could report an advance of 1.3% in 2025 and 1.9% in 2026, according to the World Bank’s ECA Economic Update for the region, published on Thursday. Growth in the ECA region is now estimated at 2.5% for 2025-26, due to weaker external demand and a slowdown in Russia.
In 2024, growth in the entire region stabilized at 3.6%, supported by private consumption and robust real wage growth, higher remittances and rising consumer credit, all of which offset weaker external demand due to subdued economic growth in the European Union.
Higher food and services price increases have led to higher inflation, which reached 5% in February 2025, up from 3.6% in mid-2024. The recent rise in inflation has prompted several central banks to raise policy rates or delay further easing.
“While countries in the Europe and Central Asia region managed to maintain steady growth last year, global uncertainty, geoeconomic fragmentation, and weak expansion among key trading partners make it more challenging to sustain this growth,” said Antonella Bassani, World Bank Vice President for Europe and Central Asia. “To achieve stronger economic expansion in the long term, it is essential that countries in the region accelerate domestic structural reforms that foster a dynamic and innovative private sector, entrepreneurship, and technology adoption.”
Trade policy uncertainty, rising trade barriers and spillover effects from euro area supply chains are expected to dampen recoveries elsewhere in the region. Growth in the Western Balkans is expected to moderate to 3.4% in 2025-26, while in Central Europe it is expected to improve only slightly to 2.7%.
In Russia, growth is projected to decline to 1.3% in 2025-26. In Turkey, growth is likely to improve modestly to 3.3% in 2025-26, although it will remain below its long-term trend, due to continued weak external demand and the ongoing economic recovery. Growth in Ukraine is likely to decline to 2% in 2025.
Economic Growth in Europe and Central Asia – Summary, 2021-26
(Real GDP Growth Rates, Annual Percentage Change)
| Country | 2021 | 2022 | 2023 | 2024e | 2025f | 2026f |
| Albania | 9.0 | 4.8 | 3.9 | 3.9 | 3.2 | 3.1 |
| Armenia | 5.8 | 12.6 | 8.3 | 5.9 | 4.0 | 4.2 |
| Azerbaijan | 5.6 | 4.6 | 1.1 | 4.1 | 2.6 | 2.4 |
| Belarus | 2.4 | -4.7 | 3.9 | 4.0 | 2.2 | 1.2 |
| Bosnia și Herzegovina | 7.3 | 3.7 | 1.9 | 2.6 | 2.7 | 3.1 |
| Bulgaria | 7.8 | 4.0 | 1.9 | 2.8 | 1.6 | 2.1 |
| Croația | 12.6 | 7.3 | 3.3 | 3.8 | 3.1 | 3.0 |
| Georgia | 10.6 | 11.0 | 7.8 | 9.4 | 5.5 | 5.0 |
| Kazakhstan | 4.3 | 3.2 | 5.1 | 4.8 | 4.5 | 3.6 |
| Kosovo | 10.7 | 4.3 | 4.1 | 4.4 | 3.8 | 3.8 |
| Republica Kârgâză | 5.5 | 9.0 | 9.0 | 9.0 | 6.8 | 5.5 |
| Moldova | 13.9 | -4.6 | 1.2 | 0.1 | 0.9 | 2.4 |
| Muntenegru | 13.0 | 6.4 | 6.3 | 3.0 | 3.0 | 2.9 |
| Macedonia de Nord | 4.5 | 2.8 | 2.1 | 2.8 | 2.6 | 2.7 |
| Polonia | 6.9 | 5.3 | 0.1 | 2.9 | 3.2 | 3.0 |
| România | 5.5 | 4.0 | 2.4 | 0.9 | 1.3 | 1.9 |
| Federația Rusă | 5.9 | -1.4 | 4.1 | 4.1 | 1.4 | 1.2 |
| Serbia | 7.9 | 2.6 | 3.8 | 3.9 | 3.5 | 3.9 |
| Tajikistan | 9.4 | 8.0 | 8.3 | 8.4 | 6.5 | 4.9 |
| Turcia | 11.4 | 5.5 | 5.1 | 3.2 | 3.1 | 3.6 |
| Ucraina | 3.4 | -28.8 | 5.5 | 2.9 | 2.0 | 5.2 |
| Uzbekistan | 8.0 | 6.0 | 6.3 | 6.5 | 5.9 | 5.9 |
| Source: World Bank
Note: Estimates and projections reflect data available through April 10, 2025. e = estimate; f = forecast, GDP = Gross Domestic Product. |
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In an analysis dedicated to accelerating growth in the current challenging global context, the report highlights the importance of a dynamic private sector. Countries should invest more in innovation, undertake reforms to support young companies, deepen financial markets, and increase investment in research and development (R&D), while continuing to focus on integrating global technology, expertise, and capital.
For middle-income countries in the region to achieve high-income status, their economies need to become more dynamic. Countries that have successfully transitioned to high-income status have done so through entrepreneurial dynamism and innovation, and should sustain this growth by harnessing technology, expertise, and capital to boost productivity growth within companies.
“Innovation and business experimentation are essential for productivity growth and a prerequisite for achieving and maintaining high-income status,” said Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia. “Middle-income countries in the region can achieve high-income status if firms grow, innovate and compete. While each country needs its own approach to restarting growth, boosting innovation and facilitating business dynamism are crucial.”
The report shows that there is a need to invest in young and innovative companies, rather than in the entire small and medium-sized enterprise (SME) sector, as these companies generate jobs. This approach should be supported by improving access to finance, especially long-term and venture capital. The region lacks sufficient finance, as venture capital and equity financing remain underdeveloped.
Stimulating competition is essential to enable the emergence of dynamic firms. The region has too many small, low-productivity businesses and too few large companies outside of state-owned enterprises that often dominate markets and stifle entrepreneurial dynamism.
Policies that encourage business innovation and technology adoption, such as greater and better-targeted R&D incentives, are also needed to help firms become more productive and innovative. Many firms in the region currently rely on reallocation of resources and operate as production facilities for foreign companies, rather than developing their own technologies.
