The World Bank issued a warning this Tuesday about Europe’s economic trajectory for 2023 and 2024. It notes the impact of the Russian economy and the deep recession Ukraine has endured this year due to the ongoing occupation. The bank projects that growth in the emerging economies of Europe and Central Asia will hover near stagnation at about 0.1 percent in 2023. In contrast, excluding Russia and Ukraine, the region is expected to expand by roughly 2.1 percent, according to the latest growth outlook released by the bank on Tuesday. The message from the agency emphasizes that the near term remains highly uncertain, with baseline forecasts skewed to the downside and risks tilted toward slower performance. The energy market disruptions triggered by the Ukraine conflict are identified as a major friction point helping to explain the softer forecast. The bank also highlights that higher interest rates aimed at curbing inflation have dampened economic activity and added to the headwinds facing the region. These factors combine to push growth expectations lower for about four out of five countries in Europe and Central Asia, amid a projected slowdown in China that could worsen conditions across the Caucasus. The agency assumes that the war in Ukraine will persist at its current intensity in the short term. Analysts project that Russia could contract by around 3.3 percent, though it may show a modest 1.6 percent rebound in 2024. If these trends hold, Ukraine’s growth outlook remains comparatively stronger this year, with a forecast around 3.3 percent, yet the World Bank warns that the destruction of infrastructure and soil damage will weigh on long-run development across the region. In a separate note, the bank’s outlook indicates that Turkey is set for steady growth, around 2.7 percent in 2023, driven mainly by increased public spending in the run-up to elections in June. The overall message is clear: the region faces external shocks and policy challenges that require careful navigation to sustain momentum through the coming years, particularly as global dynamics remain unsettled.
