In the first half of the year, moderate trade growth was observed, mainly due to anticipatory purchases of goods in expectation of tariff increases. Global financing conditions became less stringent: sovereign spreads narrowed, and stock markets strengthened. However, the region still faces external risks: slow growth in the Eurozone economies and increasing uncertainty in trade policy are limiting exports, including the automotive sector in Central Europe and the Western Balkans.
In the second half of 2025, inflation in the region, which had slowed at the beginning of the year, began to rise again.
Price growth was driven by increased costs of food and utilities, especially in Central Asia and Romania, as well as a continuous rise in wages. Most central banks preferred to keep their monetary policy unchanged.
According to World Bank forecasts, economic growth in the ECA region will remain at 2.4% in 2026. Domestic demand is expected to be supported by declining inflation, improved financial conditions, the absorption of European Union funds, and increased defense spending. A moderate recovery in exports is planned for 2027.
Growth rates for the region's countries, excluding Russia, Turkey, and Ukraine, are projected to be around 3.1% in 2026-2027. However, forecasts face significant demographic challenges, such as an aging population and a shrinking labor force. By 2050, the dependency ratio could reach 63%.
At the same time, risks to the forecasts remain high. Escalating trade tensions, protracted geopolitical conflicts, and a potential rise in global interest rates could negatively affect economic outcomes. Conversely, the situation could improve with an earlier end to the active phase of the conflict in Ukraine, which would promote increased investment in recovery and boost investor confidence.
As noted in the report, the global economy as a whole is showing resilience: growth is expected to be 2.6% in 2026 and 2.7% in 2027. Nevertheless, a quarter of developing countries are still in a more precarious situation compared to 2019.
