1、Weak Growth,High Inflation,and a Cost-of-Living CrisisWORLD BANK ECA ECONOMIC UPDATE SPRING 2023Office of the Chief Economist 2023 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW,Washington,DC 20433 Telephone:202-473-1000;Internet:www.worldbank.orgSome rights re
2、served1 2 3 4 26 25 24 23 This work is a product of the staff of The World Bank with external contributions.The findings,interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank,its Board of Executive Directors,or the governments they represent.Th
3、e World Bank does not guarantee the accuracy of the data included in this work.The boundaries,colors,denominations,and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance
4、 of such boundaries.Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank,all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attribution 3.0 IGO license(CC BY 3
5、.0 IGO)http:/creativecommons.org/licenses/by/3.0/igo.Under the Creative Commons Attribution license,you are free to copy,distribute,transmit,and adapt this work,including for commercial purposes,under the following conditions:AttributionPlease cite the work as follows:Izvorski,Ivailo,Michael M.Loksh
6、in,Julia Renee Roseman Norfleet,Dorothe Singer,and Ivn Torre.2023.“Weak Growth,High Inflation,and a Cost-of-Living Crisis.”Europe and Central Asia Economic Update(Spring),Washington,DC:World Bank.DOI:10.1596/978-1-4648-1982-7.License:Creative Commons Attribution CC BY 3.0 IGOTranslationsIf you creat
7、e a translation of this work,please add the following disclaimer along with the attribution:This translation was not created by The World Bank and should not be considered an official World Bank translation.The World Bank shall not be liable for any content or error in this translation.AdaptationsIf
8、 you create an adaptation of this work,please add the following disclaimer along with the attribution:This is an adaptation of an original work by The World Bank.Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed
9、 by The World Bank.Third-party contentThe World Bank does not necessarily own each component of the content contained within the work.The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of
10、those third parties.The risk of claims resulting from such infringement rests solely with you.If you wish to re-use a component of the work,it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner.Examples of components can
11、 include,but are not limited to,tables,figures,or images.All queries on rights and licenses should be addressed to World Bank Publications,The World Bank Group,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.ISBN(electronic):978-1-4648-1982-7DOI:10.1596/978-1-4648-1982-7Cover
12、design:Lauren Kaley Johnson ContentsiiiAcknowledgments.vAbbreviations.viCountry Codes.viiRegional Classification Used in this Report.viiiExecutive Summary.ixPART 1:Recent Developments,Policies,and Outlook .1Recent Economic Developments.2Economic Policies.15Outlook.21Trends in Europe and Central Asia
13、:Major Economies and Subregions.26Annex 1.1:Data and Forecast Conventions.35References.36PART 2:The Cost-of-Living Crisis in Europe and Central Asia .39The Nature of Price Increases in 2022 .41Implications for the Estimation of Poverty and Inequality.54Policy Implications.57References.61PART 3:Selec
14、ted Country Pages .63Albania.65Armenia.67Azerbaijan.69Belarus.71Bosnia and Herzegovina.73Bulgaria.75Croatia.77Georgia.79Kazakhstan.81Kosovo.83Kyrgyz Republic.85Moldova.87Montenegro.89North Macedonia.91Poland.93Romania.95Russian Federation.97Serbia.99Tajikistan .101Trkiye.103Ukraine.105Uzbekistan.107
15、iv World Bank ECA Economic Update Spring 2023FiguresB1.1.1 Global economic activity.31.1 Regional economic activity.51.2 Regional recent developments.101.3 Inflation.121.4 Financial conditions.151.5 Monetary policy.161.6 Fiscal policy.181.7 Regional outlook.221.8 Recent developments in major economi
16、es.282.1 Headline inflation increased across Europe and Central Asia between early 2021 and the end of 2022.412.2 Inflation varied widely across goods and services in Europe and Central Asia in 2022.422.3 Increases in food prices exceeded increases in the prices of housing and energy in almost all s
17、ubregions of Europe and Central Asia in 2022.43B2.1.1 Rents in Armenia and Georgia soared in 2022;housing prices also rose.442.4 Dispersion in price changes across consumption categories varied widely across Europe and Central Asia in 2022.452.5 Wealthier households have a more diversified consumpti
18、on than poorer households.472.6 Average cost-of-living inflation exceeded consumer price index inflation in Europe and Central Asia between mid-2021 and the end of 2022.472.7 In almost all countries in Europe and Central Asia,the cost of living increased more for poorer households than for richer on
19、es in 2022.50B2.3.1 Inflation and consumption expenditure across deciles and goods in India.542.8 The cost-of-living inflation for the poorest households has been higher than for the richest households since mid-2021.552.9 Cost-of-living-based measures of poverty were higher than consumer price inde
20、xbased ones in Europe and Central Asia in 2021 and 2022.562.10 Cost-of-living-based estimates of inequality were slightly higher than consumer price indexbased ones in Europe and Central Asia in 2021 and 2022.57Boxes1.1 Global outlook.21.2 Fiscal cost of the 2022 policy responses to the cost-of-livi
21、ng crisis.192.1 Prices for real estate and for rentals in Armenia and Georgia during 2022.442.2 Does a cost-of-living index measure inflation more accurately than the consumer price index?.482.3 The distributional impact of high energy and food inflation in South Asia.532.4 What policies did countri
22、es in Europe and Central Asia adopt to address the cost-of-living crisis?.58TablesE.1 Regional classification used in this report.viiiB1.1.1 Consensus forecasts for real GDP growth in 2023.41.1 Europe and Central Asia economic growth summary,202025.61.2 Europe and Central Asia country economic growt
23、h,202025 .7B1.2.1 Fiscal packages implemented in 2022 in response to the cost-of-living crisis in select countries of Europe and Central Asia(in percent of GDP).192.1 Consumer price and cost-of-living indexes for countries in Europe and Central Asia,2022 (in percent,12-month price change in December
24、 2022).51Acknowledgments vAcknowledgmentsThe bi-annual Europe and Central Asia(ECA)Economic Update is a product of ECAs Office of the Chief Economist led by Ivailo Izvorski,in collaboration with the Macroeco-nomics,Trade and Investment and the Poverty and Equity Global Practices,and the Pros-pects G
25、roup in the Equitable Growth,Finance and Institutions Practice Group.Anna Bjerde(Managing Director and ECA Regional VP during the preparation of the report)and the ECA regional leadership team have provided guidance and inputs during the preparation of the report.Part 1 was prepared by a team led by
26、 Ivailo Izvorski and Julia Roseman Norfleet that includes Hrisyana Doytchinova,Thomas Farole,Michael Lokshin,Harry Patrinos,Doro-the Singer,Ivn Torre,and Collette Mari Wheeler.Part 2 was prepared by Michael Lokshin and Ivn Torre in collaboration with Ayln Rodrguez Ferrari and Zurab Sajaia from the P
27、overty and Equity Global Practice.Box 2.1 was prepared by Zoe Leiyu Xie from the South Asia Office of the Chief Economist.Ivailo Izvorski and Salman Zaidi provided use-ful guidance and inputs throughout.Useful comments were provided by Azamat Agaida-rov,Florian Blum,Jasmin Chakeri,Marcel Chistruga,S
28、tefano Curto,Mariam Dolidze,Bakyt Dubashov,Olga Emelyanova,Josip Funda,Anastasia Golovach,Gohar Gyulum-nyan,Lea Hakim,Andrzej Halesiak,Claire Honore Hollweg,David Knight,Milan La-kicevic,Joana Madjoska,Sanja Madzarevic-Sujster,Armineh Manookian Salmasi,Martin Melecky,Besart Myderrizi,Arvind Nair,Des
29、islava Nikolova,Antonio Nucifora,Arvind Nair,Etkin Ozen,Catalin Pauna,Natasha Rovo,Isolina Rossi,Miguel Eduardo Sanchez Martin,Carolina Sanchez Paramo,Cristina Savescu,Marc Shiffbauer,Hilda Shijaku,Kar-lis Smits,Gallina Vincelette,Pinar Yasar,and Bakhrom Ziyaev.Part 3 was prepared by teams from the
30、Macroeconomics,Trade and Investment Global Practice(led by Andrew Burns,Lalita M.Moorty,Jasmin Chakeri,and Antonio Nucifora)and the Poverty and Equity Global Practice(led by Salman Zaidi).These teams included the following staff:Azamat Agaidarov,Reena Badiani-Magnusson,Hans Anand Beck,Florian Blum,M
31、arcel Chistruga,Mariam Dolidze,Andrei Dospinescu,Bakyt Dubashov,Olga Emelyanova,Samuel Freije-Rodriguez,Anna Fruttero,Josip Funda,Mickey Galatis,Anastasia Golovach,Gohar Gyulumyan,Lea Hakim,Sandra Hlivnjak,Claire Honore Hollweg,Saida Ismailakhunova,David Knight,Christos Kostopoulos,Leah LaBoy,Milan
32、Lakicevic,Leonardo Ramiro Lucchetti,Joana Madjoska,Sanja Madzarevic-Sujster,Ar-mineh Manookian Salmasi,Kristina Cathrine Tan Mercado,Besart Myderrizi,Arvind Nair,Metin Nebiler,Nga Thi Viet Nguyen,Trang Van Nguyen,Desislava Enikova Niko-lova,Natsuko Nozaki,Catalin Pauna,Mona Prasad,Richard Record,Sja
33、msu Rahardja,Alisha Rajabov,Nadir Ramazanov,Monica Robayo,Isolina Rossi,Natasha Rovo,Zurab Sajaia,Miguel Eduardo Sanchez Martin,Ilyas Sarsenov,Cristina Savescu,Marc Schiff-bauer,William Seitz,Lazar Sestovic,Hilda Shijaku,Maryna Sidarenka,Karlis Smits,Tihomir Stucka,Iva Tomi,Eskender Trushin,Kristina
34、 Vaughan,and Bakhrom Ziyaev.Sandra Gain and Barbara Karni provided editorial support and Michael Alwan typeset the report.Lauren Kaley Johnson provided graphic design for the cover.Indira Chand,Nicole Frost,and Aaron Wesley Korenewsky provided communications and outreach support.Suzette Samms-Lindsa
35、y oversaw the layout and production of the report.vi World Bank ECA Economic Update Spring 2023AbbreviationsCOICOP Classification of Individual Consumption According to PurposeCOL cost of livingCPI consumer price indexEBRD European Bank for Reconstruction and DevelopmentEC European CommissionECA Eur
36、ope and Central AsiaEEA European Economic Area EMDE emerging market and developing economyEU European Union FDI foreign direct investmentGDP gross domestic productGHG greenhouse gasIFPRI International Food Policy Research InstituteIMF International Monetary FundNDC nationally determined contribution
37、sNPL non-performing loanOECD Organisation for Economic Co-operation and DevelopmentPMI purchasing managers indexPPP purchasing power parityRMSD root mean square deviationSOE state-owned enterpriseSP social protectionUNHCR United Nations High Commissioner for RefugeesUNWTO World Tourism OrganizationV
38、AT value-added taxCountry Codes viiCountry CodesAlbania ALBArmeniaARMAustria AUTAzerbaijanAZEBelarus BLRBelgiumBELBosnia and Herzegovina BIHBulgariaBGRCroatia HRVCyprus CYPCzechia CZEDenmark DNKEstoniaESTFinlandFINFrance FRAGeorgiaGEOGermanyDEUGreece GRCHungaryHUNIceland ISLIreland IRLItaly ITAKazak
39、hstanKAZKosovoXKXKyrgyz RepublicKGZLatvia LVALithuaniaLTULuxembourgLUXMaltaMLTMoldovaMDAMontenegroMNENetherlandsNLDNorwayNORPolandPOLPortugalPRTRepublic of North Macedonia MKDRomaniaROURussian FederationRUSSerbiaSRBSlovak RepublicSVKSloveniaSVNSpainESPSwedenSWESwitzerlandCHETajikistanTJKTrkiyeTURTur
40、kmenistanTKMUkraineUKRUnited KingdomGBRUzbekistanUZBviii World Bank ECA Economic Update Spring 2023Regional Classification Used in this ReportThis report covers the Emerging Market and Developing Economies(EMDEs)of Europe and Central Asia(ECA).These are divided into the following groups:Central Asia
41、,Central Europe,Eastern Europe,South Caucasus,Western Balkans,Russia,and Trkiye.The report occasionally uses the term ECA to refer to the countries in both EMDE ECA and the EU.TABLE E.1 Regional classification used in this reportCentral AsiaCentral EuropeEastern EuropeSouth CaucasusWestern BalkansKa
42、zakhstanKyrgyz RepublicTajikistanTurkmenistanUzbekistanBulgariaCroatiaHungaryPolandRomaniaBelarusMoldovaUkraineArmeniaAzerbaijanGeorgiaAlbaniaBosnia and HerzegovinaKosovoMontenegroRepublic of North MacedoniaSerbiaRussian FederationTrkiyeExecutive Summary ixThe Russian Federations invasion of Ukraine
43、 has had devastating economic and social consequences for Ukraine and profound impacts on development and poverty alleviation in Europe and Central Asia(ECA).Growth in economic activ-ity in the emerging markets and developing economies of ECA slowed substan-tially in 2022 to 1.2 percent,as surging i
44、nflation,energy and value chain disrup-tions,and marked monetary tightening weighed on the economic expansion.Economic growth is set to remain mediocre in 2023,with real GDP projected to increase to 1.4 percent,as the contraction in Russia eases and the fall in Ukraines output subsides.The economic
45、expansion in Trkiye will soften as the impact of the two devastating earthquakes the country suffered in February,as well as weakening external demand and private consumption,present drags on growth.The February earthquakes,along with more than 9,000 aftershocks and several additional earthquakes,ha
46、ve resulted in over 50,000 deaths in Trkiye.The affected areas comprise nearly a tenth of the countrys output and are ex-pected to suffer considerable economic damage,with direct physical damages amounting to an estimated$34.2 billion,or 4 percent of GDP.The resulting eco-nomic destruction in these
47、regions further exacerbates the immense human trag-edy from the earthquakes.Excluding Russia and Ukraine,growth in ECA is projected to fall to 2.4 per-cent in 2023 from 4.7 percent in 2022,reflecting the impact of tighter financial conditions,persistent inflation,and subdued external demand.Growth i
48、n 2023 may be weaker still if there is an escalation of the war in Ukraine,further in-creases in food and energy prices,an accelerated tightening of monetary policy globally or in the region,or a sudden reversal of capital flows into the region.Inflation surged in 2022,with large increases in food a
49、nd fuel prices following Russias invasion of Ukraine,building on an already large increase in 2021 as economies reopened after the COVID-19 pandemic.Inflation remains stubbornly high in the region.Core inflationexcluding food and fuel pricesis projected to remain elevated,and efforts to reduce it wi
50、ll take longer than most market participants and policy makers expect.Tighter financial conditions will continue to weigh on private investment in most economies,with sustained core inflation pressures raising the possibility of additional policy rate hikes by major central banks.The risk-off enviro
51、nment that characterized most of 2022 has resulted in volatile market movements,generat-ing an increasing risk of financial turmoil that has continued into 2023.Following substantial outlays of government support to protect households and firms from two back-to-back crises,fiscal consolidation will
52、be a priority to restore fiscal space and rebuild fiscal buffers in most of the region.Executive Summaryx World Bank ECA Economic Update Spring 2023Over the medium to long term,structural constraints amid an incomplete market transition in many countries,weak productivity,problematic education outco
53、mes,limited innovation,and a rapidly aging population need to be ad-dressed to help expand the regions productive capacity.The recent energy crisis presents an opportunity for the region to accelerate green transition goals.By enacting policies to support a steady and sensible transition away from a
54、 high dependence on fossil fuels,ECA countries can facilitate a reduction in the re-gions high energy intensity and ameliorate environmental degradation.Against the background of slow growth and high inflation,this ECA Economic Update also focuses on the cost-of-living crisisthe impact of high infla
55、tion on the standards of living of people in the region.A sharp rise in consumer prices,particularly for food and energy,resulted in median annual inflation in the emerging markets and developing economies of ECA of 15.9 percent in Septem-ber 2022,a level not recorded since 1999.Rising food prices a
56、nd energy bills,higher mortgages and rents,and elevated prices for services are eroding the standards of living for a large part of the popu-lation of ECA.Households have become vulnerable to various income shocks that have pushed them into poverty or substantial vulnerability.The cost-of-liv-ing cr
57、isis in the region is so acute that 93 percent of Europeans identify inflation as their most pressing concern.The analysis conducted for this Update shows that the high inflation of 2022 had a heterogeneous impact on the population of ECA.Due to differences in both consumption patterns and price inc
58、reases across goods and services,the poorest households faced significantly higher inflation than the wealthiest households in almost every country in ECA in 2022.In the emerging markets and developing countries in the region,households in the bottom decile of the consumption dis-tribution faced cos
59、t of living increases that were on average more than 2 percent-age points higher than those faced by households in the top decile,with the dif-ference reaching 5 percentage points in some countries.In addition,the average inflation estimated using the cost-of-living increases for different household
60、s was higher than Consumer Price Index(CPI)inflation measured using an aggregate consumer price basket.In most countries in the region,the poverty headcount rate,the poverty gap,and the Gini index of in-equality were all higher when using household-specific cost-of-living indexes than when using the
61、 CPI.Using the CPI to measure inflation in such situations could lead to policies with potentially unintended redistributional consequences.Not considering diverging inflation patterns might be especially harmful in to-days times of lower growth.These findings have strong policy implications,because
62、 many public pro-grams targeting vulnerable populations link eligibility and benefit levels to the average CPI-based inflation rate and not the(higher)cost-of-living increase that disproportionately affects the poor.Policies to protect vulnerable groups and promote economic growth should account for
63、 the heterogeneity of inflation across households.Using inflation indicators that capture more precisely the ac-tual costs of living of the poor are essential for designing efficient poverty allevia-tion policies.1The Russian Federations invasion of Ukraine has had devastating economic and social co
64、nsequences for Ukraine and profound negative impacts on developments in Europe and Central Asia(ECA).The expansion of economic activity in ECA slowed markedly to 1.2 percent in 2022,as disruptions to the supply of key commodities,surging inflation,and the tightening of monetary policy weighed on act
65、ivity in the region.Modestly higher oil production in Russia,as well as resilient private consumption due to robust fiscal support in most countries to shield households from the cost-of-living crisis,resulted in a 1 per-centage point upgrade to ECA growth in 2022 relative to January 2023 projection
66、s.Strong inflows of migrants,money,and business from Russia and Ukraine,as well as trade and investment diversion as a result of Russias war in Ukraine,led to a surge in output in several countries.Following a substantial increase in 2021 due to the reopening of ECAs economies from COVID-19-related
67、restrictions,inflation surged further in 2022,as Russias inva-sion of Ukraine exacerbated existing pressures in food and energy prices.Inflation has remained stubbornly high through the first quarter of 2023.Output in the region is projected to increase moderately by 1.4 percent in 2023,better than
68、projected in January 2023,largely reflecting upgrades to the pace of economic activ-ity in major economies.Excluding Russia and Ukraine,growth is projected to weaken to 2.4 percent in 2023,from 4.7 percent in 2022,as a result of tighter financial conditions,persistent inflation,and subdued external
69、demand.These projections are subject to pro-found uncertainty,with Russias war in Ukraine representing a shock of historical pro-portions.Risks to the outlook are further tilted to the downside,including from the fur-ther tightening of financial conditions following recent developments in US and Eur
70、opean banking sectors.Recent Developments,Policies,and Outlook12 World Bank ECA Economic Update Spring 2023Recent Economic DevelopmentsEconomic expansion slowed as a result of Russias invasion of UkraineThe Russian Federations invasion of Ukraine,the subsequent disruption of en-ergy,food,metals and
71、other supplies,and the tightening of monetary policy and financial conditions dramatically slowed growth in Europe and Central Asia(ECA)in 2022.Growth of regional activity weakened to 1.2 percent in 2022 from 7.1 percent in 2021,with a contraction in Russia,a deep recession in Ukraine,and a substant
72、ial slowdown in Trkiye(box 1.1;figure 1.1,panel a).In addition to the significant human toll,Russias war in Ukraine resulted in surging prices for food,fuel,and other commodities,heightened commodity price volatility,in-creased policy and geopolitical uncertainty,and dampened domestic and exter-nal
73、demand.Rapid and sizable tightening of monetary policy and global finan-cial conditionstriggered by the need to rein in above-target inflation in the worlds major economiesled to similar tightening across developing ECA that further weighed on activity.Global growth is projected to slow sharply in 2
74、023,resulting in the third weakest pace of expansion in nearly three decades after the global recession caused by the COVID-19 pandemic and the global financial crisis(figure B1.1.1,panel a)(World Bank 2023a).The slowdown reflects ongoing monetary policy tightening to contain very high inflation,fis
75、cal adjustment,worsening financial conditions,and continued disruptions from the Russian Fed-erations invasion of Ukraine.Amid tight financial conditions,the recent developments in the US financial sector have generated increased financial market stress and threatened additional weakness in the Unit
76、ed States and the euro area.The result-ing spillovers,including elevated risk-off sentiment,threaten to exacerbate other headwinds faced by emerging markets and developing economies and present further drag on growth prospects.Global activity,especially on the services side,appears to have stabilize
77、d in early 2023,reduc-ing the likelihood of a global recession(figure B1.1.1,panels b and c).b After contracting for six months,the global composite Purchasing Manag-ers Index(PMI)returned to expansion in February 2023,reflecting a strong pickup in services activity.Services trade is likely to conti
78、nue to benefit from the recovery in international tourist arrivals,which remained about 25 percent below pre-pandemic trends in December 2022.By contrast,global man-ufacturing activity has continued to be subdued after global goods trade volumes and industrial production experienced renewed weakness
79、 in late 2022.The recovery in the global manufacturing PMI in early 2023 has lagged that of services,reflect-ing an ongoing contraction in new export orders.Chinas economic reopening is likely to boost head-line global growth,but the positive spillovers to other economies and global trade could be m
80、od-est given that the rebound has been less manu-facturing-and external trade-intensive relative to previous recoveries.More broadly,global demand for manufactured goods is likely to remain muted Global outlook aBOX1.1(Continued next page)Part 1:Recent Developments,Policies,and Outlook 3amid the ong
81、oing and accumulating effects of tighter monetary policy.Nevertheless,weak goods demand and continued normalization of shipping conditions have helped ease global supply chain pressures,with suppliers delivery times falling to pre-pandemic levels in February 2023.The outlook for the global economy a
82、ppears to have improved in early 2023,with Consensus fore-casts for global growth in 2023 rising from 1.5 per-cent in late December to 2 percent in late March(table B1.1.1 and figure B1.1.1,panel d).c Various economic indicators suggest that particularly in large economies,activity was more resilien
83、t in late 2022 than earlier expected,implying that the drag from a weak fourth quarter in 2022 will weigh less on activity going forward.In the United States,con-(continued)BOX1.1(Continued next page)420246199019921994199619982000200220042006200820102012201420162018202020222024PercentPercent10123452
84、02320242023202420232024EMDEsAEsWorldBaselineSharp downturnGlobal recession10203040506070Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Feb-23ManufacturingServicesIndex,50+=expansion10123456United StatesChinaGlobalEuro areaDecember 2022March 2023Percen
85、ta.Global growth,19902024c.Global manufacturing and services PMIs,201923b.Global growth under different scenariosFIGURE B1.1.1 Global economic activityd.Consensus forecasts for 2023Sources:Consensus Economics;Haver Analytics;World Bank(2023a);World Bank.Note:AEs=advanced economies;EMDEs=emerging mar
86、kets and developing economies;GDP=gross domestic product;PMI=Purchasing Managers Index.a.Aggregate growth rates are calculated using real US dollar GDP weights at average 201019 prices and market exchange rates,as published in World Bank(2023).The shaded area indicates forecasts.The sample includes
87、up to 37 advanced econ-omies and 144 EMDEs.b.Growth aggregates computed by Oxford Economics using 2015 market exchange rates and prices.c.PMI readings above(below)50 indicate expansion(contraction).The last observation is February 2023.d.The figure shows growth projections from the last Continuous C
88、onsensus Forecast survey of the month indicated.Data are through March 27,2023.4 World Bank ECA Economic Update Spring 2023tinued strength in the labor market has supported services activity and underpinned a pickup in con-sumption in early 2023,with Consensus forecasts up from 0.2 percent in late D
89、ecember 2022 to a still modest 1.1 percent in March 2023.The Consensus forecast for US growth in 2024,which is 0.8 per-cent,points to sluggish activity as tighter monetary policy weighs on domestic demand.For the euro area,Europe and Central Asias largest economic partner,Consensus forecasts for 202
90、3 growth remain subdued at about 0.6 percent,still an improvement from the contraction envi-sioned in December 2022.The upward revision to the Consensus forecasts for euro area growth in 2023 is largely due to better-than-expected growth outturns in the fourth quarter of 2022,with activity benefitin
91、g from a warmer winter and the decrease in energy prices from the highs earlier in the year.Incoming survey data point to an ongoing recov-ery in sentiment,particularly in services,with the services PMI rising to its highest level in February 2023 since June 2022,amid a pickup in new busi-ness and i
92、mproving expectations.In contrast,the manufacturing PMI in February 2023 contracted for the eighth consecutive month,with the decline in new export orders mirroring the weakness in global goods trade.Inflation also continues to weigh on euro area activity.The Consensus forecast for 2024 growth in th
93、e euro area remains subdued at 1 per-cent,as continued tightening of monetary policy to rein in inflation is expected to hold down domestic demand.Risks to the global outlook remain tilted to the downside,including from sustained high inflation,financial stress,Russias continued war in Ukraine,and r
94、ising geopolitical tensions.Inflation remains high in many economies.Although the Harmo-nized Index of Consumer Price Inflation has slowed in early 2023,core inflation continues to reach new record highs.Moreover,there is substantial uncertainty about the impact of central bank policy in terms of bo
95、th magnitude and timing.To bring inflation under control,central banks may need to hike policy rates more than is currently expected.Financial stress among sovereigns,banks,and non-bank financial institutions may result from the com-bination of additional monetary tightening,softer growth,and fallin
96、g confidence in an environment of elevated debt.Given the already weak global growth,a combination of sharper monetary policy tightening,and financial stress could result in a more pronounced slowdown this year.(continued)BOX1.1TABLE B1.1.1.Consensus forecasts for real GDP growth in 2023December 202
97、2 SurveyMarch 2023 SurveyWorld economy1.52.0United States0.21.1Euro area-0.10.6China4.55.4Sources:Consensus Economics;World Bank.Note:GDP=gross domestic product.Table shows real GDP growth.Data are based off of the last Continuous Con-sensus Forecast survey.Data are through March 27,2023.a.Based on
98、World Bank(2023a),the February and March 2023“Global Monthly”Newsletters,and Consensus estimates from Consensus Economics.Data are as of March 27,2023.b.Defined as a contraction in annual global per capita income.c.Consensus Economics,https:/.Part 1:Recent Developments,Policies,and Outlook 5The larg
99、e slowdown in regional output growth in 2022 was less pronounced than expected in January 2023,with ECAs growth upgraded by 1 percentage point(figure 1.1,panel b)(World Bank 2023a).Russias economy is estimated to have contracted by 2.1 percent in 2022,an upgrade of 1.4 percentage points rela-tive to
100、 January 2023,accounting for a large share of the regional upgrade for 2022(figure 1.1,panel b).Substantial fiscal stimulus partly offset weaker private con-sumption and exports to deliver a better-than-expected outcome.Oil production in Russia rose modestly in 2022 rather than decrease as earlier e
101、xpected.Besides Russia,the improvement relative to previous estimates was broad-based,with growth for 2022 revised higher in nearly two-thirds of ECAs economies.In 2024682010201120122013201420152016201720182019202020212022202320242025PercentPercenta.ECA growth,201025 b.ECA growth in 2022c.Contributi
102、ons to growth,by major economiesd.Contributions to growth,by subregions40200204063036ECARussianFederationUkraine(RHS)CurrentJanuary 2023PercentPercentECA excl.RussianFederationand Ukraine42024682019202020212022RussiaTrkiyeOthersECA2101232019202020212022Central AsiaCentral EuropeEastern EuropeSouth C
103、aucasusWestern BalkansPercentFIGURE 1.1 Regional economic activitySources:World Bank(2023a);World Bank.Note:ECA=Europe and Central Asia.Aggregate growth rates are calculated using real US dollar GDP weights at average 2010-19 prices and mar-ket exchange rates.a.Shaded area indicates forecasts.b.“Cur
104、rent”refers to projections in tables 1.1 and 1.2.“January 2023”refers to projections released in the January 2023 edition of the Global Economic Prospects report(World Bank 2023a).c,d.Figures shows contribution to ECA output.“Others”includes Central Asia,Central Europe,Eastern Europe,South Caucasus,
105、and Western Balkans subregions,which is shown in panel d.6 World Bank ECA Economic Update Spring 2023Trkiye,robust growth in private consumption and exports helped output ex-pand by 5.6 percent in 2022,serving as a significant driver of regional growth last year(figure 1.1,panel c).Excluding Russia
106、and Ukraine,growth of ECAs gross domestic product(GDP)is estimated to have slowed to 4.7 percent in 2022 from 8.3 percent in 2021,reflecting to a substantial extent the hit to consumption growth from high infla-tion eroding household purchasing power.The underlying growth momentum in most countries
107、was robust relative to potential,reflecting the ongoing reopen-ing from the COVID-19 pandemic and the subsequent release of pent-up demand(figure 1.1,panel d).In Central Europe and the Western Balkans,following stron-ger-than-expected growth in the first half of 2022,activity weakened in the sec-ond
108、 half of the year in tandem with the euro area.In Central Asia and the South Caucasus,large inflows of migrants and money transferspredominantly from Russia and also Ukraineand double-digit trade growth led to significant out-put growth in the second half of last year,leading to upgrades in full-yea
109、r growth by 0.2 and 0.5 percentage points,respectively.Because of a growth surge in Ar-meniathe fastest growing country in ECA in 2022 and one of only two TABLE 1.1 Europe and Central Asia economic growth summary,202025(Real GDP growth at market prices in percent,unless indicated otherwise)202020212
110、022e2023f2024f2025fPercentage point differences from January 2023 projections2022e2023f2024fEMDE ECAa1.77.11.21.42.72.71.01.30.1EMDE ECA excl.the Russian Federation and Ukraine1.08.34.72.43.63.70.50.30.2EMDE ECA excl.the Russian Federation,Trkiye,and Ukraine2.76.44.21.83.23.40.30.10.1Central Europeb
111、2.96.74.71.12.93.30.20.00.2Western Balkansc3.17.63.02.53.13.60.10.00.0Eastern Europe excl.Ukrained3.13.620.30.62.84.43.90.50.7South Caucasuse5.36.77.03.03.43.60.50.30.1Central Asiaf1.35.34.14.04.34.20.20.10.0Russian Federation2.75.62.10.21.20.81.43.10.4Trkiye1.911.45.63.24.34.10.90.50.3Poland2.06.84
112、.90.72.63.20.50.00.4Source:World Bank.Note:World Bank forecasts are frequently updated based on new information and changing(global)circumstances.Consequently,projections presented here may differ from those contained in other World Bank documents,even if basic assessments of countries prospects do
113、not differ at any given moment in time.Due to lack of reliable data of adequate quality,the World Bank is currently not publishing economic output,income,or growth data for Turkmenistan,and Turkmenistan is excluded from cross-country macroeconomic aggregates.Since Croatia became a member of the euro
114、 area on January 1,2023,it has been removed from the ECA aggregate.e=estimate;ECA=Europe and Central Asia;EMDE=emerging market and developing economies;f=forecast;GDP=gross domestic product.a.GDP and expenditure components are measured in average 2010-19 prices and market exchange rates.b.Includes B
115、ulgaria,Hungary,Poland,and Romania.c.Includes Albania,Bosnia and Herzegovina,Kosovo,Montenegro,North Macedonia,and Serbia.d.Includes Belarus,Ukraine,and Moldova.e.Includes Armenia,Azerbaijan,and Georgia.f.Includes Kazakhstan,the Kyrgyz Republic,Tajikistan,and Uzbekistan.Part 1:Recent Developments,Po
116、licies,and Outlook 7countries with stronger growth in 2022 than in 2021the South Caucasus is the only ECA subregion where the pace of economic expansion was faster in 2022 than in 2021.Government spending measures that were enacted to ameliorate the impact of inflation on households and firms helped
117、 partly offset negative price shocks and shield households in several economies(Albania,Bosnia and Herzegovina,Bulgaria,Croatia,Kosovo,Moldova,Montenegro,North Macedonia,Poland,Ro-mania,and Serbia).Among energy exporters,elevated energy prices cushioned activity and boosted exports,limiting the slow
118、down in growth(Azerbaijan and Kazakhstan).The recovery in tourist arrivals lifted services exports and growth,notably in Albania,Croatia,Georgia,Montenegro,and Trkiye.TABLE 1.2 Europe and Central Asia country economic growth,202025a(Real GDP growth at market prices in percent,unless indicated otherw
119、ise)202020212022e2023f2024f2025fPercentage point differences from January 2023 projections2022e2023f2024fAlbania3.58.53.52.23.43.40.00.00.0Armenia7.25.712.64.44.85.01.80.30.0Azerbaijan4.35.64.62.22.52.60.40.60.1Belarus0.72.44.70.61.41.31.52.91.1Bosnia and Herzegovinab3.07.44.02.53.03.50.00.00.0Bulga
120、ria4.07.63.41.52.83.00.30.20.5Croatia8.613.16.31.32.83.00.30.50.3Georgia6.810.510.14.45.05.00.10.40.0Hungary4.57.14.60.62.62.60.50.10.4Kazakhstan2.54.33.23.54.03.60.20.00.0Kosovo5.310.73.53.74.44.20.40.00.2Kyrgyz Republic8.46.27.03.54.04.01.50.00.0Moldova7.413.95.91.84.24.14.40.20.0Montenegro15.313.
121、06.13.43.12.90.20.00.0North Macedonia4.73.92.12.42.72.90.00.00.0Poland2.06.84.90.72.63.20.50.00.4Romania3.75.84.82.63.94.10.20.00.3Russian Federation2.75.62.10.21.20.81.43.10.4Serbia0.97.52.32.33.03.80.20.00.0Tajikistan4.49.48.05.04.04.01.00.00.0Trkiye1.911.45.63.24.34.10.90.50.3Ukraine3.83.429.20.5
122、3.56.55.82.80.6Uzbekistan2.07.45.75.15.45.80.00.20.3Source:World Bank.Note:World Bank forecasts are frequently updated based on new information and changing(global)circumstances.Consequently,projections presented here may differ from those contained in other World Bank documents,even if basic assess
123、ments of countries prospects do not signifi-cantly differ at any given moment in time.Due to lack of reliable data of adequate quality,the World Bank is currently not publishing economic output,income,or growth data for Turkmenistan,and Turkmenistan is excluded from cross-country macroeconomic aggre
124、gates.e=estimate;f=forecast;GDP=gross domestic product.a.Data are based on GDP measured in average 2010-19 prices and market exchange rates,unless indicated otherwise.b.Production approach-based numbers.8 World Bank ECA Economic Update Spring 2023On February 6,2023,Trkiyethe regions second largest e
125、conomyexperi-enced two major earthquakes,with magnitudes of 7.8 and 7.5 on the Richter scale,with several additional earthquakes and more than 9,000 aftershocks re-ported in the following weeks.The first earthquake was the most powerful one recorded in the country since 1939.The earthquakes resulted
126、 in more than 50,000 deaths and 100,000 injured.The 11 Turkish provinces affected by the earthquakes account for 16.4 percent of the countrys population and 9.4 percent GDP.Direct losses as a result of the earthquakes are estimated at$34.2 billion,or 4 percent of 2021 GDP,based on the World Banks Gl
127、obal Rapid Post-Disaster Damage Esti-mation released on February 27,2023(Gunasekera et al.2023).The actual costs to meet the full range of recovery and reconstruction needs could be double the direct damages.The World Bank has committed$1.8 billion in support to the country after the earthquakes.Pri
128、vate consumption growth was negatively affected by higher inflationGrowth of real private consumption,excluding Russia,Trkiye,and Ukraine,fell by nearly half to 3.6 percent in 2022 as inflation eroded household incomes and significantly curbed spending.1 However,several factors supported consump-tio
129、n.Most important were the substantial government support measures.Fur-ther,tight labor markets fueled significant wage increases that helped boost con-sumption in the first half of the year in several countries.Migrants from Russia and refugees from Ukraine lifted demand for goods and services throu
130、ghout the region.Higher remittances and money transfers from the European Union and the United Kingdom to Albania,Bosnia and Herzegovina,and Kosovo and from Russia to Armenia,Azerbaijan,Kyrgyz Republic,Tajikistan,and Uzbekistan sup-ported private consumption in these countries.Large minimum wage inc
131、reases,such as those in Trkiye,also boosted real household incomes,resulting in a surge in private consumption in 2022.Growth in fixed investment has slowedAfter averaging 23 percent of GDP over 2010-19,fixed investment in ECA has been negatively affected by the COVID-19 pandemic,the sharp tightenin
132、g in fi-nancial conditions,and the increase in risk aversion of both domestic and foreign investors amid Russias invasion of Ukraine.2 In 2022,fixed investment growth slowed to 4.2 percentwith the ratio to GDP only modestly higher than the his-torical outcomedown from the post-pandemic surge of 6 pe
133、rcent in 2021 and slightly above the 201019 average of 4.1 percent.In response to Russias invasion of Ukraine,governments in ECA adopted support measures to help firms and households amid two back-to-back crises.As 1.Sample includes 17 ECA economies for which GDP component data are available.2.Fixed
134、 investment refers to gross fixed capital formation.Fixed investment in ECA has been about 5 percentage points higher than in Latin America and the Caribbean but has substantially lagged East Asia and Pacific by about 1015 percentage points since the mid-1990s(World Bank 2023a).Part 1:Recent Develop
135、ments,Policies,and Outlook 9a result,many governments delayed capital spending.For example,fixed invest-ment in Bulgaria weakened to 15.4 percent of GDP in 2022,with a sharp slow-down in government investment to less than 4 percent of GDP,impacted nega-tively also by an ongoing political crisis and
136、the lack of a regular government.Recent declines in ECAs foreign direct investment(FDI)inflows pose chal-lenges for long-term growth prospects.In the four years leading to the global fi-nancial crisis,FDI inflows to Central Europe and the Western Balkans increased to an average of 8.2 percent of GDP
137、.FDI inflows in the two subregions slowed after the crisis and fell to a near 20-year low of 1.7 percent of GDP by 2020,also reflecting the impact of the COVID-19 pandemic.High global interest rates and investor concerns about elevated risks in ECA are continuing to weigh on FDI into the region.Infl
138、ows of FDI are projected to average 2 percent of GDP in 2023 and remain little changed over the medium term.External trade has been mixedFollowing Russias invasion of Ukraine,trade volumes contracted on average in 2022,reflecting supply chain disruptions and weaker demand from the European Union(EU)
139、(figure 1.2,panel a).The averages hide huge variation across ECA,nonetheless.The manufacturing Purchasing Managers Index(PMI)subindex for new export orders,despite remaining in contractionary territory,has shown signs of a smaller contraction in early 2023(figure 1.2,panel b).3 Trade diversion led t
140、o a surge in exports in several countries.In Armenia,export volumes increased by 70 percent in the second half of 2022,pushing growth for the year up to 55 percent;in Georgia,export volumes increased by 25 percent in 2022.High commodity prices benefited commodity exporters in the region,especially A
141、zerbaijan and Kazakhstan.Azerbaijans current account sur-plus almost doubled to nearly 27 percent of GDP in 2022,and it looks likely to remain elevated at just below 20 percent in 2023.In Kazakhstan,foreign trade turnover amounted to$134 billion,an all-time high,and the current account shifted from
142、a deficit of 4 percent of GDP in 2021 to a nearly 3 percent surplus in 2022.Amid the ongoing reopening of ECAs economies after the COVID-19 pan-demic,tourism rebounded,leading to an increase in services exports(figure 1.2,panel c).International tourist arrivals recovered to nearly 80 percent of pre-
143、pan-demic levels in 2022 in Europe(figure 1.2,panel d).In some ECA countries,tour-ist arrivals even surpassed pre-pandemic levels(for example,Albania).In mid-2022,the European Union adopted a package of sanctions banning seaborne imports of crude oil and oil products from Russia to the European Unio
144、n.These sanctions came into force on December 5,2022,for Russian crude oil exports and on February 5,2023,for Russian petroleum products.The sanc-tions prohibit shippers,lenders,and insurers from supplying services unless oil products are purchased at or below the price caps set by the European Unio
145、n.The price caps,which are meant to limit global price pressures and profits,are set at$60 per barrel for crude oil,$45 per barrel for discounted petroleum products,3.Manufacturing PMI surveys are available for four ECA economies:Kazakhstan,Poland,Russia,and Trkiye.10 World Bank ECA Economic Update
146、Spring 2023and$100 per barrel for premium petroleum products.These sanctions apply only to the EU countries but not to the other countries in ECA.As a result,non-EU EMDE countries in ECA have continued to import Russian oil and natural gas.In Trkiye,strong export growth in 2022 was offset by a surge
147、 in imports due to the countrys rising energy bill and demand for gold,the latter used to hedge against inflation.Exports have benefited from a recovery in tourism and trade diversion following Russias invasion of Ukraine.The composition of trade also shifted to include additional machinery,and food
148、 to Russia.Overall,the coun-trys current account deficit widened to$48.8 billion in 2022,its largest 12-month deficit since mid-2018.Sources:CPB Netherlands Bureau for Economic Policy Analysis(database);Haver Analytics;World Bank;World Trade Organization.Note:ECA=Europe and Central Asia.a.Figure sho
149、ws percent year-on-year change in goods trade volumes and industrial production.Trade volumes are calculated as the average of im-ports and exports of Eastern Europe,as defined by the CPB Netherlands Bureau for Economic Policy Analysis.The last observation is January 2022.b.Purchasing Managers Index
150、(PMI)values above(below)50 indicate expansion(contraction).New export orders are a subindex of the manufactur-ing PMI.Aggregates are calculated as average for 4 ECA economies for manufacturing and for 3 ECA economies for new export orders.The last observation is February 2023.c.Figure the contributi
151、on of ECA economies to the year-on-year percent change of monthly services values in ECA.Sample includes Bulgaria,Hun-gary,Poland,Romania,Serbia,and Trkiye.Last observation is January 2023.d.Figure shows percent change in tourist arrivals compared to the same month in 2019.Aggregates are calculated
152、as medians.Central Europe sample includes Bulgaria,Hungary,Poland,and Romania.Western Balkans includes Albania,Bosnia and Herzegovina,Montenegro,North Macedo-nia,and Serbia.PercentIndex,50+=expansionTrkiyeOthersECA excl.Russia and UkrainePercentPercentCentral EuropeGeorgiaTrkiyeWestern Balkans241680
153、816Jan-22Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Jan-23Goods tradeIndustrial production40424446485052Jan-22Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Jan-23Feb-23ManufacturingNew export orders604020020406080Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oc
154、t-21Jan-22Apr-22Jul-22Oct-22Jan-2380604020020Jan-22Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22FIGURE 1.2 Regional recent developmentsa.Goods trade volumes and industrial productionb.Manufacturing and new export orders PMIsc.Services trade values,202022d.Tourist arrivals,2022Pa
155、rt 1:Recent Developments,Policies,and Outlook 11Inflation remains stubbornly highMedian 12-month headline inflation in Emerging Market and Developing Econo-mies(EMDE)ECA moderated to 15.3 percent in early 2023 after peaking at 15.9 percent in September 2022,the latter being the highest rate since 19
156、99(figure 1.3,panel a).ECA has been among the hardest hit regions by surging inflation,and with median inflation the highest among EMDE subregions,notably East Asia and the Pacific,Latin America and the Caribbean,and the Middle East and North Africa(figure 1.3,panel b).A decline in energy prices fro
157、m record highs,sup-ported by a milder winter in Europe and diversification of energy imports,helped cool inflation alongside the emerging effects of ongoing monetary policy tightening(figure 1.3,panel c).Inflation in Central Europe peaked at 21.2 percent in January 2023,but price pressures have cont
158、inued to intensify in some countries.In Hungary and Poland,inflation was among the highest in the EU,rising to 25.3 percent and 18.4 percent in February 2023,respectively.In the Western Balkans,inflation has moderated to 14 percent from its peak of 15.9 percent in October 2022 as households have inc
159、reasingly curbed spending in response to higher prices.The inflow of mi-grants and money transfers into Central Asia and the South Caucasus drove up domestic demand and inflation but also helped appreciate some of the curren-cies,notably in Armenia and Georgia.Inflation peaked in the second quarter
160、of 2022 in the South Caucasus,reaching 13.3 percent in May 2022.Inflation appears to have continued to increase in Kazakhstan and the Kyrgyz Republic,however.Prior to Russias invasion of Ukraine,inflation was already rising in 2021 and early 2022 as countries in ECA reopened following the COVID-19 p
161、andemic.The release of pent-up demand from the 2020 recession revealed stark shortages and supply chain disruptions,with bottlenecks continuing to push up inflation in 2022.With labor markets already tight in many ECA countries prior to the pan-demic,the sudden increase in demand for goods and servi
162、ces during the pan-demic recovery spilled over into firms increased demand for labor to meet pro-duction needs,leading to rising wages,higher input prices,and elevated production costs.Reduced labor force participation in many countries,including the large share of young people neither in employment
163、 nor in education or train-ing,has been an important reason behind the tight labor markets.Excluding food and energy,median 12-month core inflation surged before peaking at 17.9 percent in September 2022,an increase of 9.8 percentage points from February 2022(figure 1.3,panel d).Excluding Russia,Trk
164、iye,and Ukraine,median 12-month core inflation has more than doubled since February 2022,climbing to 13.8 percent in December 2022,its highest rate in nearly 26 years,before subsiding to 12.5 percent in February 2023.The surge in food and energy prices accounted for 60 percent of the increase in hea
165、dline inflation in ECA in 2022(figure 1.3,panel e).Russias invasion of Ukraine led to disruptions in exports of key food commodities,which exacer-bated food price increases throughout the region.A jump in fertilizer prices,as well as domestic challenges,including drought,low crop yields,and export b
166、ans in some cases,have also contributed(Azerbaijan,Bosnia and Herzegov-ina,Bulgaria,Hungary,Kazakhstan,Moldova,Montenegro,North Macedonia,12 World Bank ECA Economic Update Spring 2023PercentPercentPercentFIGURE 1.3 Inflationa.Headline inflation,February 2023 c.Food and energy prices,201023e.Composit
167、ion of median headline CPI inflation in ECA b.Inflation in EMDE regions,201623d.Core inflation in select ECA countries f.Food inflation,201923ECAEuro area010020030040050060002040608010012020102011201220132014201520162017201820192020202120222023Crude oilWheatUS$/bblUS$/mt02550750102030AlbaniaBelarusK
168、azakhstanNorthMacedoniaPolandRomaniaRussiaFederationUkraineTrkiye(RHS)February 2023PeakPercentPercentPercentPercentOthersFood,energy,housing&other basic utilitiesTransportHeadline CPIECACentralAsiaCentralEuropeEasternEuropeSouthCaucasusWesternBalkans201920202021202220230102030405060051015202530Trkiy
169、e(RHS)MoldovaUkraineKazakhstanPolandNorth MacedoniaKyrgyz RepublicSerbiaBulgariaRomaniaMontenegroAzerbaijanBosnia&HerzegovinaUzbekistanBelarusRussian FederationKosovoArmeniaGeorgiaAlbania-4048121620162017201820192020202120222023EAP(excl.China)ECALACMNASARSSAChina010203005101520Jan-21Mar-21May-21Jul-
170、21Sep-21Nov-21Jan-22Mar-22May-22Jul-22Sep-22Nov-22Jan-23Sources:Haver Analytics;International Monetary Fund;World Bank.Note:CPI=consumer price index;ECA=Europe and Central Asia;EMDE=emerging market and developing economies.a.Figure shows non-seasonally adjusted data,except for Kazakhstan.b.Figure sh
171、ows median inflation by region.Last observation is January 2023.c.Dashed lines indicate 2010-19 averages.Last observation is February 2023.d.Figure shows core inflation and corresponding peak in 2022 for countries indicated.The peak is October 2022 for Albania and Trkiye;August 2022 for Belarus;Dece
172、mber 2022 for Kazakhstan,North Macedonia,Poland,Romania,Ukraine,and Uzbekistan;and April 2022 for the Russian Federation.e.Figure shows year-on-year headline CPI inflation and contributions to inflation for categories indicated.Aggregates are calculated as median.Sample includes 14 ECA economies.Las
173、t observation is January 2023.f.Figure shows annual averages of food consumer price inflation.Sample includes 22 ECA economies.Aggregate inflation rates are based on median non-seasonally adjusted year-on-year inflation across countries,except for Kazakhstan which is seasonally adjusted.Data are thr
174、ough February 2023.Part 1:Recent Developments,Policies,and Outlook 13Romania,Poland,Serbia,Trkiye,and Ukraine).ECAs heavy reliance on Russia for energy left the region particularly vulnerable to the supply disruptions gen-erated by Russias war in Ukraine,adding to energy insecurity.Before the war,EM
175、DE ECA energy imports from Russia accounted for 36 percent of the re-gions total;for natural gas,Russias share was 42 percent,similar to the share of the EU.Prices for both food and energy have eased from last years highs but remain elevated relative to historical levels.The Black Sea Grain Initiati
176、ve has helped enable exports from Ukraine since August,with wheat exports amounting to 23.6 million tons in the second half of 2022,or a third below the level a year earlier.A substantial increase in prices for oil and coal in 2022,and all-time highs for natu-ral gas,have helped reduce consumption o
177、f these fuels.Energy prices subse-quently declined in line with this reduced consumption,slower global demand,and a milder winter in Europe(World Bank 2023a).Although international com-modity prices have continued to ease in the first quarter of 2023,prices for natural gas remain double their averag
178、es in the decade prior to the COVID-19 pandemic,and prices for maize and wheat are double their 201519 averages.Food inflation has remained high in early 2023,with over half of the ECA re-gion experiencing food inflation of 20 percent or greater at the start of the year(figure 1.3,panel f).The media
179、n 12-month food price inflation climbed to 22.2 percent by February 2023,nearly double the rate in February 2022 and a more than six-fold increase relative to January 2019.Food inflation in the region has surged to even higher levels in several countries,peaking at 102 percent in Tr-kiye and 49.4 pe
180、rcent in Hungary in November 2022both much higher than in the rest of EMDE ECA.Inflation measured by the Consumer Price Index masks substantial variations in the inflation rate experienced by households with different consumption pat-terns(see part 2).A feature of high inflation episodes is that pri
181、ces increase at a substantially different pace across categories of goods and services,leading to an increase in relative price dispersion.As a result,households with different pat-terns of consumption face different inflation rates on the goods and services they consume.Due to differences in both c
182、onsumption patterns and price increases across goods and services,the poorest households faced significantly higher in-flation than the wealthiest households in almost every country in ECA in 2022.In EMDE ECA,households in the bottom decile of the consumption distribution faced cost of living increa
183、ses that were on average more than 2 percentage points higher than those faced by households in the top decile,with the difference reaching 5 percentage points in some countries.Financial conditions have tightened substantially Higher policy and lending rates,and dollar appreciation in 2022 resulted
184、 in tighter financial conditions.The risk-off environment that characterized most of last year has resulted in volatile market movements,generating an increasing risk of financial turmoil that has continued into 2023.The March 2023 collapse of several banks in the United States has exacerbated finan
185、cial pressures;rapid in-terest rate increases were at the core of the difficulties faced by these banks.The 14 World Bank ECA Economic Update Spring 2023deterioration in market sentiment has forced many banks to tighten lending,leading to even tighter financial conditions,which could weigh on activi
186、ty in some advanced economies,raising concerns of weaker growth and the risk of significant spillovers to the ECA region.After rising to its highest level since the early 2000s in October 2022,the US dollar has remained volatile,affecting several of the currencies in the region(fig-ure 1.4,panel a).
187、A surge in money transfers from abroad to Armenia and Geor-gia led to currency appreciations of nearly 14 percent and 9.5 percent,respec-tively,during 2022.Bond spreads on dollar-denominated debt largely declined in the second half of 2022 and into 2023,with the median Emerging Markets Bond Index de
188、clining to 244 basis points after widening to as much as 436 basis points in 2022 as a result of the invasion and tighter global and domestic financial condi-tions(figure 1.4,panel b).However,spreads have climbed in March 2023,reflect-ing the impact of tensions in the banking sector in the United St
189、ates and Europe.Ten-year spreads on local currency bonds eased to 5.9 percent on average after peaking at 7 percent on average in October 2022(Bulgaria,Georgia,Hungary,Montenegro,and Poland).January 2023 was one of the busiest months for EMDEs issuing international debt.The uptick followed a sharp d
190、ecline in debt issuance in 2022,during which spreads on dollar-denominated debt exceeded 10 percentage points in about one in five EMDEs,up from less than one in fifteen in 2019,effectively locking them out of global debt markets(World Bank 2023a).In ECA,Romania issued the equivalent of$3.75 billion
191、 in maturities of 5,10,and 30 years in Janu-ary.Hungary issued the equivalent of$4.25 billion at similar maturities,and Tr-kiye issued a$2.75 billion 10-year bond yielding 9.75 percent.Serbia raised$1.75 billion with two dollar-denominated Eurobonds.After issuing 2.25 billion euros of Eurobonds at 7
192、-and 12-year maturities in September 2022,Bulgaria also raised an additional 1.5 billion in a 10-year Eurobond issuance yielding 4.5 per-cent in January.Credit growth has slowed Tighter monetary policy and a surge in uncertainty negatively affected credit growth across most countries in ECA in 2022.
193、Nominal private sector credit growth slowed during 2022 in most countries,including Kazakhstan,Moldova,Romania,Russia,Serbia,and Ukraine(figure 1.4,panel c).By contrast,nominal credit growth picked up in Tajikistan and Uzbekistan.In real terms,however,credit to the private sector slowed substantiall
194、y in most ECA countries,hamper-ing enterprises efforts to expand.While the banking sector in Europe and Central Asia has remained broadly resilient,nonperforming loans(NPLs)face upward pressure in many economies.Across Central Asia,regulatory disclosed NPLs are likely lower than the actual problem l
195、oans in the banking systems as signaled,for example,by the upward adjustments of problem loans mandated by asset quality reviews.Although the rate of NPLs in Trkiye remained stable,the overall level of distressed debt(NPLs plus debt at risk of default)rose sharply in 2022(World Bank 2023a).The econo
196、mic impact of the devastating earthquakes that struck Part 1:Recent Developments,Policies,and Outlook 15Trkiye in February 2023 will depend to a substantial degree on the fiscal response.It is expected that the impact on the banking sector will be more limited as the fi-nancial sectors exposure to t
197、he earthquake-affected provinces is modest.Economic PoliciesHigher inflation led to tighter monetary policy in 2022In response to surging inflation,central banks in many ECA countries without currency boards or pegged exchange rates increased policy rates substantially in 2022.Of the 17 central bank
198、s with inflation targets,16 reported headline inflation above the upper bound of the target band in 2022(figure 1.5,panel a).Most of these central banks raised policy rates last year,with the median policy rate ECA excl.Armenia and RussiaArmeniaRussiaPercent change fromDecember 31,2019Depreciationa.
199、Currency movements,202023c.Private credit growth,202223b.ECA bond spreadsAppreciationCOVID-19Russias invasion of UkraineBasis pointsWeeks8910111213Jan-22Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Jan-23Percent2502550Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jun-21Sep-21Dec-21Mar-22J
200、un-22Sep-22Dec-22Mar-2301002003004005006000510152025303540455055FIGURE 1.4 Financial conditionsSources:Haver Analytics;Institute of International Finance;World Bank.Note:EMBI=Emerging Markets Bond Index.a.Figure shows 7-day moving average of median.Sample includes 20 ECA economies.Last observation i
201、s March 27,2023.b.Figure shows the Emerging Market Bond Index(EMBI)for the weeks since the onset of the COVID-19 pandemic and Russias invasion of Ukraine.The date of onset is January 20,2020,for COVID-19 and February 24,2022,for Russias invasion of Ukraine.Aggregates are calculated as medians of dai
202、ly data.Bond index calculated using subindices of the EMBI Global Index,which includes dollar denominated government debt.Last obser-vation is March 24,2023.Sample includes 10 ECA economies.c.Figure shows the median year-on-year growth in private sector credit.Data are monthly and in nominal local c
203、urrency units.Sample includes 11 ECA economies.16 World Bank ECA Economic Update Spring 2023increase amounting to 475 basis points(figure 1.5,panel b).4 Cumulative policy rate hikes since the start of 2022 ranged from 1,150 basis points in Moldova to just 50 basis points in Georgia.Georgia had alrea
204、dy increased interest rates to double digits in 2021 as domestic demand rebounded strongly when COVID-19 related restrictions were lifted.These rate increases compare to a cumulative hike of 350 4.Countries that use the euro as the official currency(Kosovo and Montenegro)or have currency board arran
205、gements with currencies pegged to the euro(Bulgaria and Bosnia and Herzegovina)do not have active monetary policy(World Bank 2021;IMF 2022c).The euro is also the official currency in Croatia following the integration of the country into the euro area and the Schengen Area on January 1,2023,although
206、prior to the countrys accession,Croatias currency was pegged to the euro.The Central Bank of North Macedonia targets the exchange rate rather than inflation.Sources:Consensus Economics;Haver Analytics;International Monetary Fund;World Bank.a.Aggregates are calculated as median.Inflation data reflect
207、 actuals for 2022,and Consensus Economics forecasts of headline CPI inflation based on the March 2023 survey for 2023-24.Sample includes 16 ECA economies.Whiskers indicate interquartile ranges.Diamonds indicate inflation tar-gets as of March 24,2023.b.c.Aggregates are calculated as median.Figure sho
208、ws year-on-year percent change.Sample includes 18 ECA economies for policy rates and 20 ECA economies for inflation and excludes Russia and Ukraine.Last observation is February 2023.d.Figure shows the share of ECA economies with policy rates higher than 5,10 and 15 percent by end of the year for 202
209、1 and 2022.Sample in-cludes 19 ECA economies.Policy rateInflationPercentPercentECA excl.Russia,Trkiye,and UkraineTrkiye(RHS)PercentPercent02040608051015Policy rate,percent20212022Percent0510152025Europe andCentral AsiaCentralEuropeEasternEuropeSouthCaucasusWesternBalkans202220232024Inflation target0
210、481216Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Feb-2380604020020408642024Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Feb-23FIGURE 1.5 Monetary policya.ECA inflation expectations and inflation t
211、argetsb.Nominal policy rates vs inflation c.Real policy rates in ECA,201923d.Share of countries that have policy rates above indicated thresholds in ECA,by year Part 1:Recent Developments,Policies,and Outlook 17basis points by the European Central Bank through late March 2023.Despite sharp increases
212、 in policy rates in ECA,inflation continues to outpace the policy rate in many countries,resulting in negative real policy rates(figure 1.5,panel c).Although most inflation-targeting central banks in the region tightened mon-etary policy,the regions two largest economies implemented rate cuts.In Rus
213、sia,after doubling the policy rate following the invasion of Ukraine,the central bank implemented a series of rate cuts from April through September 2022 that left the policy rate 100 basis points below its December 2021 level.In Trkiye,despite a surge in the officially measured inflation,which peak
214、ed at 85.5 percent in Octo-ber 2022(substantially above the 7 percent upper band of the inflation target range),the central bank cut the policy rate by 500 basis points during 2022.Infla-tion has eased to a still high 55 percent by February 2023.In response to the devastating earthquakes,the central
215、 bank cut the policy rate by an additional 50 basis points to 8.5 percent in February 2023.For some countriesnotably Moldova and those in the South Caucasus and Central Asiasubstantial dollarization and shallow financial markets have lim-ited monetary policy transmission and,in some cases,led to lar
216、ge policy rate increases in 2022.For others,policy rate hikes have had a modest impact,as infla-tion has been driven largely by external factors,notably higher prices for food and fuel.Nonetheless,monetary policy actions have likely helped to buoy inves-tor confidence,which is critical in ECA given
217、the elevated policy uncertainty and geopolitical tensions in the region(World Bank 2021).Fiscal consolidation was delayedMeasures to ameliorate the impact of the surge in food and energy prices and help refugees from Ukraine limited scope for fiscal adjustment in ECA in 2022.In many ECA countries,no
218、netheless,spending increases were partly offset by higher revenues driven by both higher growth and inflation and commodity-re-lated receipts(figure 1.6,panel a).Most ECA countries are set to step up fiscal consolidation efforts in 2023 as emergency support measures are unwound,driv-ing improvements
219、 in fiscal balances(figure 1.6,panel b).A common denominator of fiscal developments in the region was the substan-tial support measures to help households and firms cope with surging fuel and food prices and support refugees from Ukraine(box 1.2).The median energy-related fiscal package in Central E
220、urope,the Western Balkans,and Trkiye amounted to 2.7 percent of GDP.Social protection measures enacted by govern-ments included shoring up social assistance programs(Albania)and increasing pensions(Albania,Bosnia and Herzegovina,and Bulgaria).In Poland,govern-ment spending rose because of increased
221、social spending(Solidarity Package mea-sures and public assistance to Ukrainian refugees),as well as foregone revenues of about 1 percent of GDP under the“anti-inflation shields.”The unwinding of CO-VID-19-related support measures also helped on the expenditure side(Georgia).For many ECA countries,s
222、tronger fiscal revenues due to better-than-expected growth and improved tax collection were the main reason for improved fiscal balances in 2022(figure 1.6,panel c).Energy exporting countries,such as Azer-baijan and Kazakhstan,benefited from higher energy prices and stronger oil and 18 World Bank EC
223、A Economic Update Spring 2023natural gas-related revenues.In Uzbekistan,higher gold exports supported rev-enues.In Armenia,revenues rose by 21 percent in nominal terms because of double-digit output growth and stepped-up tax collection.A similarly large in-crease in revenues(29 percent)was observed
224、in Georgia.Under-execution,or delay,of planned spending(Albania,Kosovo)and curbs to capital outlays(Bul-garia and Kosovo)also helped reduce expenditures and alleviate pressures on fiscal balances.Some countries in the region experienced a deterioration in fiscal balances due to idiosyncratic factors
225、.In Russia,a marked increase in military and social spend-ing and a decline in resource-related revenuesdespite higher oil productionshifted the fiscal balance from a surplus to a deficit.In the Kyrgyz Republic,the increase in the fiscal deficit in 2022 was due in part to stepped-up lending to en-er
226、gy state-owned enterprises.In Tajikistan,the deficit widened from 1.4 percent Sources:IMF(2022a);World Bank.Note:Data for 2022-25 are projections as calculated by IMF(2022a).a.Aggregates are calculated as median.b.Figure shows percentage point differences in fiscal balance as a share of GDP.Aggregat
227、es are period averages over 2022-24 of medians.c.Sample includes 21 ECA economies.d.Figure shows median gross debt.Sample includes 22 ECA economies.Shaded area indicates forecasts.86420220152016201720182019202020212022Central AsiaCentral EuropeSouth CaucasusWestern BalkansPercent of GDP0.00.20.40.60
228、.81.01.2CentralEuropeWesternBalkansSouthCaucasusCentralAsiaPercentage points01020304050CentralAsiaCentralEuropeSouthCaucasusWesternBalkansMin-max rangeMedianPercent of GDPPercent of GDP02550752010201120122013201420152016201720182019202020212022202320242025201019 averageFIGURE 1.6 Fiscal policya.Fisc
229、al balances,by ECA subregionb.Fiscal consolidation in ECA,202224c.Government revenues in ECA,2022 d.Gross government debt in ECA,201025Part 1:Recent Developments,Policies,and Outlook 19Many countries in Europe and Central Asia imple-mented large fiscal packages in response to the high energy and foo
230、d prices during 2022.Several countries in Central Europe,the West-ern Balkans,and Trkiye were very dependent on imports of natural gas from the Russian Federation.These countries implemented energy price caps,introduced energy subsidies,and stepped up social assistance programs.The median energy-rel
231、ated fiscal package in these countries amounted to 2.7 percent of gross domestic product(GDP)with the packages in Croatia and Kosovo exceeding 4 per-cent of GDP(table B1.2.1).Countries in Central and Eastern Europe are also hosts to large numbers of refugees from Ukraine,and the fiscal costs associ-
232、ated with their accommodation and temporary pro-tection amounted to about 1 percent of GDP in the Czech Republic,Estonia,and Poland(IMF 2022b).Fiscal cost of the 2022 policy responses to the cost-of-living crisisBOX1.2(Continued next page)TABLE B1.2.1 Fiscal packages implemented in 2022 in response
233、to the cost-of-living crisis in select countries of Europe and Central Asia(in percent of GDP)CountrySocial protection(SP)and income support measuresEnergy related measuresTotal CommentsAlbania0.61.31.9Increases in support to vulnerable households,minimum wage and acceleration of pension benefit ind
234、exation.Azerbaijan1.61.6Increases in wages,pensions,and social allowances,as well as VAT exemptions and subsidies for foodBosnia and Herzegovina0.73.03.7The income support measures reflect wage increases in both entities.Bulgaria3.0Price cap of electricity for households and firms;fuel subsidies;tax
235、 reductions for energy goods and services;additional pension increases.Croatia4.2aPrice caps for fuel and electricity,subsidies and tax reductions for natural gas,and cash supports for vulnerable households.Georgia0.2Increases in transfer to local municipalities to accommodate costs associated to hi
236、gher inflationKazakhstan3.03.0Increase in transfers to local governments and allocation to welfare-enhancing programs.Kosovo2.61.74.3SP measures include agricultural subsidies.Moldova1.00.41.4SP measures include funds for loans at subsidized interest rates.Montenegro0.30.91.2Provided one-off support
237、 to pensioners and reduced fuel excises.The regulated electricity price has remained unchanged during 2022.North Macedonia0.62.22.8Electricity block tariffs were introduced to incentivize energy savings.Poland0.11.41.5Additional costs of about 0.4 percent of GDP were associated with the accommodatio
238、n and protection of Ukrainian refugees.20 World Bank ECA Economic Update Spring 2023Some of the measures included:Croatia implemented a retail fuel price cap and electricity price caps for households and public institutions,while providing support to businesses facing higher electricity prices,as we
239、ll as reductions of VAT and subsidies to natural gas.It also provided direct cash sup-port for poor households.In Kosovo,the government allocated 2.6 per-cent of GDP in April and an additional 1.7 percent in September for pension and social assistance top-ups,wage bonuses,and energy subsidies for ho
240、useholds and businesses.The Bosnia and Herzegovina entity govern-ments capped electricity prices,suspended excises on fuel,and increased public wages and pensions.In Serbia,the fiscal package included subsi-dies to the national gas and electricity com-panies,social protection and income support meas
241、ures,and reduced excises on fuel.Bulgaria subsidized firms electricity bills,kept electricity prices unchanged for households,reduced VAT and excise taxes to energy good and services as well as some food items,and also strongly increased pensions.Some countries are planning to phase out some of the
242、energy subsidies during 2023 or move to more targeted programs,likely contingent on inter-national price developments.Bulgaria plans to keep the price cap on elec-tricity,directly(for households)or through compensation(in the case of businesses).Croatias current price cap for electricity expires at
243、the end of March 2023.Poland will keep electricity and natural gas prices fixed during 2023 for households;these measures are expected to cost about 2 per-cent of GDP,which is higher than the cost of the fiscal package in 2022(1.5 percent of GDP).In Kosovo,International Monetary Fund pro-jections in
244、dicate that electricity subsidies in 2023 would be about 1.5 percent of GDP if prices remain at 2022 levels.Moldova plans to increase spending to address the cost-of-living crisis,to 5.2 per-cent of GDP(2.4 percent in pension and wage increases,0.7 percent in targeted social assis-tance programs,1.7
245、 percent in energy subsi-dies,and 0.4 percent in revenue measures).Trkiye plans to double energy subsidies to households in 2023,to about 3.5 percent of GDP.(continued)BOX1.2(Continued next page)CountrySocial protection(SP)and income support measuresEnergy related measuresTotal CommentsRomania1.51.0
246、2.5The cost to the budget is broadly offset by windfall profit taxes on energy producers and higher SOE dividend payouts.Serbia1.12.23.3SP measures include increases in pensions and public wages.Trkiye1.71.7The government subsidized 80 percent of natural gas and 50 percent of electricity used by hou
247、seholds,as well as increasing minimum and public sector wages and offering tax benefits to households.Uzbekistan0.70.7Increase in social allowances to vulnerable peopleSources:IMF Article IV reports published in 2022 and other IMF publications;Ari et al.2022;Sgaravatti et al.2021.Note:All figures ar
248、e preliminary and correspond to estimates of spending during 2022 unless otherwise noted.GDP=gross domestic product;SOE=state-owned enterprise;SP=social protection.a.Includes expenditures to be incurred during the first quarter of 2023.Part 1:Recent Developments,Policies,and Outlook 21By contrast,th
249、e countries in Central Asia and the South Caucasus did not face major disruptions to their energy markets as they are net fuel export-ers or have continued importing energy from their neighbors and Russia,in some cases at discounted prices.Several countries in Central Asia,especially Uzbekistan,but
250、also Kyrgyz Republic and Tajikistan faced a severe energy crisis in early 2023,when much of the population was left without power or heat for a week in freezing temperatures.While many factors contributed to this,the overall energy environment caused by Russias war on Ukraine,played an important rol
251、e.The fiscal packages imple-mented by the countries in the Southern Caucasus and Central Asia were smaller size than those in East-ern Europe and the Western Balkans and included:Social protection measures during 2022 amounted to 1.6 percent in Azerbaijan(includ-ing increases in wages,pensions,and s
252、ocial allowances,as well as value-added tax exemptions and subsidies for food),and 0.2 percent in Georgia(mostly in transfers to municipalities).Armenia is planning to increase social protection spending by 0.2 percent of GDP during 2023.In Kazakhstan,the government implemented a price freeze for fu
253、el,restricted exports of many food staples,and adopted a morato-rium on utility price increases.It also ramped up its welfare-enhancing programs and increased transfers to local governments to a total of 3 percent of GDP.Support to vulnerable households was increased in Uzbekistan by about 0.7 perce
254、nt of GDP,while the Kyrgyz Republic increased public sector wages,social benefits and pen-sions.Tajikistan also provided support to vul-nerable households,and increased the mini-mum wage,public sector wages and pensions.(continued)BOX1.2Sources:The authors;IMF Article IV reports published in 2022 an
255、d other IMF publications;Ari et al.2022;Sgaravatti et al.2021.of GDP to 1.9 percent,with higher nontax revenues and grants partially offsetting lower revenue collection from reforms to streamline the number of taxes and reduce tax rates.Public debt to GDP ratios declined in most countries,moderating
256、 from a me-dian 66 percent of GDP in 2020 to an estimated 60 percent in 2022;the latter is still elevated relative to the regions 2010-19 median of 50 percent(figure 1.6,panel d).Weak growth prospects,delays in fiscal consolidation in some cases,and higher financial costs will likely affect debt pro
257、spects over the medium term.OutlookGrowth in ECA is likely to remain lackluster in 2023The pace of economic expansion in the EMDEs of Europe and Central Asia is projected to modestly increase to 1.4 percent in 2023 from 1.2 percent in 2022,as the contraction in Russia eases and the fall in Ukraines
258、output subsides(figure 1.7,panels a and b).The devastating earthquakes in Trkiye will pose headwinds to both the countrys outlook and the regions prospects.The better projections for the regions largest economies have resulted in a 1.3 percentage point upgrade to the projections relative to those fr
259、om January 2023(World Bank 2023a).22 World Bank ECA Economic Update Spring 2023Sources:World Bank.Note:ECA=“Europe and Central Asia”.Aggregate growth rates are calculated using GDP weights at average 2010-19 prices and market exchange rates.Values indicate forecasts.a,b.“January 2023”refers to proje
260、ctions released in the January 2023 edition of the Global Economic Prospects(World Bank 2023a).c.Pre-pandemic trend is calculated by assuming that average growth achieved over 2010-19 is maintained through 2020-23.d.Growth for components reflects data for 16 ECA economies for which GDP components da
261、ta are available.“GDP”reflects growth rates found in table 1.1.42024Europe andCentral AsiaRussianFederationUkraineCurrentJanuary 2023PercentEurope andCentral AsiaexcludingRussian Federationand UkraineCurrentJanuary 2023Percent642020192020202120222023PercentPercentPercentPercent20222023Private consum
262、ptionInvestmentExportsImportsGDP420246801234CentralAsiaTrkiyeSouthCaucasusWesternBalkansCentralEuropeEasternEurope012345Europe andCentral AsiaEurope andCentral Asiaexcl.RussianFederation andUkraineRussianFederationUkraine012345CentralAsiaTrkiyeEasternEuropeSouthCaucasusWesternBalkansCentralEuropeFIG
263、URE 1.7 Regional outlooka.ECA growth in 2023c.Percent deviation of ECA outputfrom pre-pandemic trende.ECA growth in 202425b.ECA subregional growth in 2023d.Contributions to growth for ECA excludingRussia,Trkiye,and Ukrainef.ECA subregional growth in 202425Part 1:Recent Developments,Policies,and Outl
264、ook 23Although output for ECA as a whole has recovered to pre-COVID levels,out-put in 2023 is projected to be 4.9 percent below what it would have been had growth continued after 2019 at the average pace achieved before the pandemic(figure 1.7,panel c).In Russia,growth is projected to remain in cont
265、ractionary territory in 2023,although close to zero,with a 3.1 percentage point upgrade relative to the Janu-ary 2023 forecast.The improvement reflects a smaller-than-earlier-expected fall in oil production in 2023,as Russias energy exports are diverted from the Euro-pean Union to other countries,pa
266、rticularly China and India.After a modest in-crease in oil production in 2022,production is expected to decline slightly in 2023,as EU sanctions continue to take hold and Russia voluntarily reduces production.For economies that are tightly linked with Russia and benefitted from trade and investment
267、diversion in 2022largely those in the South Caucasus and Central Asiagrowth in 2023 is projected to slow as the boost from these positive shocks diminishes.Early indications point to smaller money flows in early 2023,includ-ing remittances,that will weigh on growth in these countries.In Trkiye,the s
268、lowdown in activity is likely to be contained as additional government support measures and earlier increases to minimum wages help households cope with inflation and lift domestic demand.Excluding Russia,Trkiye,and Ukraine,growth in ECA is forecast to fall to 1.8 percent in 2023 from 4.2 percent in
269、 2022.The deterioration in near-term growth prospects reflects dampened private consumption and investment amid additional tightening of global financial conditions,weaker external demand,and persistent inflation(figure 1.7,panel d).Sustained weakness in external de-mand is projected to hamper expor
270、ts,as activity in the euro area continues to soften and spillovers from the reopening of Chinas economy remain modest.Tighter financial conditions will continue to weigh on investment in most econ-omies,with sustained core inflation pressures raising the possibility of additional policy rate hikes b
271、y major central banks.Private investment and inflows of FDI in most EMDE ECA countries are problematic given an unfinished market transition in some,the substantial share of state-owned and state-connected enterprises in oth-ers,and the uneven playing field for both private and public enterprises ov
272、erall.Public investment is also anticipated to increase after the pandemic and cost-of-living crisis prompted many governments to delay capital spending to in-crease the space for current outlays.In many countries,investment is expected to be lifted by energy infrastructure and reconstruction spendi
273、ng.Following sub-stantial outlays of government support to protect households and firms from two back-to-back crises,fiscal consolidation will also be a priority to restore fiscal space and rebuild fiscal buffers in most of the region.The structural nature of fiscal deficits and government spending
274、in many countries in ECA is a major challenge to overcome.Private consumption has been a strong driver of growth in recent years and government support,including hikes in minimum wages,have been essential.As inflation remains high and given the emphasis on fiscal consolidation in many countries,cons
275、umption is unlikely to remain as strong a driver in the near term.It is essential for governments to be mindful of this,as weaker consumption growth will frustrate the ambitions of populations to achieve higher living standards.24 World Bank ECA Economic Update Spring 2023Headline inflation is expec
276、ted to ease in 2023 but remain above central bank targets.Slowing inflation largely reflects lower energy prices.Core inflationex-cluding food and fuel priceswill remain elevated,and efforts to reduce it will take longer than most market participants and policy makers expect.As inflation eases,domes
277、tic demand recovers,uncertainty partly dissipates,and the external environment improves,growth in ECA is projected to increase to an aver-age 2.7 percent over 202425(figure 1.7,panels e and f).This will be a subdued pace of expansion,nonetheless,that will do little to revive the convergence of ECAs
278、in-comes relative to those in advanced economies.Slowing reform momentum will weigh on growth prospectsOver the medium to long term,structural constraints amid an incomplete market transition in many countries,weak productivity,lagging education outcomes,lim-ited innovation,and a rapidly aging popul
279、ation need to be addressed to help ex-pand the regions productive capacity.The recent energy crisis presents an oppor-tunity for the region to accelerate green transition goals.By enacting policies to support a steady and sensible transition away from a high dependence on fossil fuels,ECA countries
280、can facilitate a reduction in the regions high energy intensity and ameliorate environmental degradation.An incomplete market transition in several countries,notably on reducing the role of the state in the economy,continues to present a drag on growth.Several countries made progress in improving th
281、e environment for private sector develop-ment,nonetheless.For example,the authorities in Serbia made energy tariff ad-justments and advanced structural reforms to restore the financial balances of state-owned utilities while ameliorating the impact on households.In Georgia,the government is moving w
282、ith the unbundling of power generation and transmission to meet its commitments to the European Energy Community.In Uzbekistan,de-spite significant progress on reforms in recent years,the states overwhelming con-trol over factor and key intermediate input markets has constrained private sector devel
283、opment.About 2,500 state-owned enterprises(SOEs)continue operation,and many of them benefit from monopoly rights and special privileges in crucial sec-tors of the economy.The government aims to partially privatize most of its large SOEs and also privatize most of the state-owned banks.To improve the
284、 environment for private sector growth,the authorities in Kazakhstan set up an independent Com-petition Agency to oversee competition policy,reduce explicit and implicit prefer-ences for SOEs,and otherwise help level the playing field for all enterprises.A declining and aging population is a major o
285、bstacle to stronger and sustain-able growth in ECA.The share of people 65 and older in the total population rose from 6 percent in 1950,to 10 percent in 1995,and to 14 percent in 2023;it is pro-jected by 2050,this share will increase to 22 percent.5 Whereas aging is often driven by a fall in both fe
286、rtility rates and mortality at old age,the rise in the median age in EMDE ECA is attributable to low and declining fertility rates rather than in-creases in longevity.Indeed,in more than half the countries in EMDE ECA,the population is already shrinking.In several countries,emigration has accelerate
287、d 5.Projections for 2023 and 2050 are based on the United Nations medium-fertility demo-graphic scenario(United Nations 2022).Part 1:Recent Developments,Policies,and Outlook 25population declines.Policies aimed at boosting labor force participation among inactive populations,as well through migrant
288、worker integration,could provide meaningful progress in limiting the long-term implications of aging on growth(World Bank 2022a).Active labor market policies can increase labor demand and the efficiency of labor market matching,including through wage subsidies and job re-tention policies,as well as
289、measures that enhance job search assistance and on-the-job training.Boosting female labor participation can be achieved by job training programs specifically aimed at women,including vocational training(Bandiera et al.2020).The large share of young people neither working nor in schools is also an is
290、sue that needs urgent resolution.In Bulgaria,Croatia,Poland,and Romania,about 17 percent of people ages 15-29 are neither in employment,nor in education or training.Policies aimed at boosting economic freedom and improving business environments can also improve labor force participation.Warmer tempe
291、ratures and more volatile weather patterns are disrupting eco-systems across ECA,increasing the frequency of extreme weather events.If no action is taken,economic damages from droughts and floods in Central Asia are projected to be up to 1.3 percent of GDP per year,while crop yields are expected to
292、decrease by 30 percent by 2050,leading to around 5.1 million internal climate migrants.Even EU countries will experience large impacts.Without adaptation,more than 400,000 jobs are expected to be lost annually by 2050,with the overall cost of climate-related extreme weather reaching 170 billion by t
293、he end of the century.The effects of climate change will deepen the ongoing natural resource degradation in ECA,with impacts concentrated on vulnerable populations that rely on natural resources for their livelihoods.More than half of the countries in the ECA region are experiencing declines in agri
294、cultural and forestry resources,and water stress levels are acute in a number of ECA countries.Air pollution is the largest environmental risk of premature death in ECA(482,800 deaths in 2019);estimated air pollution welfare costs are equivalent to 4.6 percent of GDP on aver-age across ECA,with stag
295、gering peaks in some countries(e.g.,18.9 percent in Serbia,16.3 percent in Bulgaria,15.9 percent in North Macedonia,which are also the three countries with the highest welfare costs at the global level).ECA has considerable potential for climate action,notably emissions reduc-tions,but policy action
296、 has been limited to date.While emissions intensity has fallen faster in ECA than in most other regions,this is mainly driven by structural economic change and offshoring of emissions-intensive manufacturing.Overall emissions intensity in the region remains high,and 10 of the worlds 20 most car-bon
297、intensive economies are in ECA.In ECA,90 percent of emissions come from the energy sector,with significant contributions from electricity,buildings,heat-ing,and flaring.Significant opportunities exist to substantially decarbonize energy use through massively expanding renewables,moving away from coa
298、l,and the broader electrification of buildings and transport sectors.Outside of the EU,how-ever,investment to decarbonize the energy sector in ECA have been limited,Na-tionally Determined Contribution(NDC)commitments are largely modest,and initiatives to remove fossil fuel subsidies and introduce ca
299、rbon pricing,while emerging,have been slow.6 6.Renewable energy sources contribute less than 7 percent of total energy supply in developing ECA,less than half the global average and less than one-third of the level in the European Union.26 World Bank ECA Economic Update Spring 2023Despite limited pr
300、ogress on climate mitigation,more recently,many countries in the ECA region are laying the foundations for a more aggressive response to climate change.Virtually all countries in the region(19 of 22 outside of the EU)have submitted updated,more ambitious NDCs and the majority have estab-lished net z
301、ero targets.Emissions trading systems are operating in Kazakhstan and Ukraine,while Montenegro and North Macedonia,among others,are in the process of putting them in place.Climate laws have been passed in at least 10 countries,most recently in Serbia.Countries in the region are also taking steps to
302、develop and implement policies to strengthen climate adaptation and resilience.Fifteen countries,plus those in the EU,include adaptation in their NDCs and at least 11 have established National Adaptation Plans.In Uzbekistan,even though some reforms such as achievement of full cost-recovery tariffs a
303、nd establishing a new energy regulator were delayed by the COVID-19 pandemic and the un-certainty caused by Russias invasion of Ukraine,they remain a high priority for the government in 2023.In Romania,energy intensity is above the EU average and there is a lot to be done to improve energy efficienc
304、y.The government,as a result,has set ambitious targets to reduce primary energy consumption and the renovation of buildings has been identified as a crucial initiative to meet these targets.In Kazakhstan,the government has moved to integrate sustainable de-velopment principles into sector policies a
305、nd programs,reduce greenhouse gas(GHG)emissions,promote energy efficiency,and facilitate more investments in renewable energy.The new Environmental Code also introduces measures to address climate change vulnerabilities in agriculture,water management,and forestry.In Georgia,the Government has submi
306、tted to Parliament a draft law on Industrial Emissions to monitor,prevent,and reduce emissions,including of GHGs,that is fully aligned with EU Directives on Industrial Emissions.Trends in Europe and Central Asia:Major Economies andSubregionsRussian Federation7 In Russia,output contracted 2.1 percent
307、 in 2022 as domestic demand,including investment,deteriorated significantly following international sanctions as a re-sult of its invasion of Ukraine.The contraction in output is less severe than previ-ously projected,as significant government support and better-than-expected oil production offset d
308、eclines in private consumption and exports,leading to a 1.4 percentage point upgrade relative to the projections included in the January 2023 forecast(World Bank 2023a).In response to international sanctions,Russia diverted a significant share of its international trade,with China,India,and Trkiye e
309、merging as major partners.Last year,the value of Russian fuel exports to the European Union declined by 7.It is presently difficult to produce growth forecasts for Russia due to the significant changes to the economy associated with Russias invasion of Ukraine,and the decision by Russia to limit pub
310、lication of economic data,notably related to external trade,financial and monetary sectors.Available data limits the ability to assess the economic performance.Part 1:Recent Developments,Policies,and Outlook 27about 40 percent,while exports to India increased sixfold,with India accounting for nearly
311、 20 percent of Russias fuel exports(figure 1.8,panel a).Imports by Rus-sia from the European Union declined by about 40 percent in value in 2022,while imports from Trkiye almost doubled.The sanctions on Russia have impacted oil and gas revenues,which have de-clined 46 percent in January 2023 relativ
312、e to January 2022 levels.As a result,Rus-sias fiscal deficit worsened,with the January 2023 budget deficit amounting to 1.8 trillion rubles,or 60 percent of the planned budget deficit for 2023 as a whole.The budget deficit is expected to increase in 2023 because of weakening reve-nuesnotably from hy
313、drocarbonsand higher spending for its war in Ukraine.The impact of sanctions is also evident elsewhere in the economy,with retail trade and industrial production posting their worst contractions in December 2022 since the COVID-19 pandemic hit in early 2020.Output is projected to contract by 0.2 per
314、cent in 2023,a 3.1 percentage point upgrade from January 2023 projections(World Bank 2023a).Following strong oil production last year,the improvement in the outlook reflects a smaller-than-ex-pected reduction in oil production in 2023,as Russia diverts oil exports to China and India after the implem
315、entation of the EU oil sanctions(figure 1.8,panel b).The projection for 2023 growth assumes that natural gas exports to the European Union remain at a fraction of the pre-invasion levels(figure 1.8,panel c).Growth is projected to resume but remain muted over the medium term,reaching 1.2 percent in 2
316、024 and 0.8 percent in 2025,amid modest consumption growth and a marginal recovery in exports as Russia continues to reorient its trade relationships.Over the long term,its invasion of Ukraine and the associated repercussions are likely to reduce Russias potential growth rate.The ruptures to trade a
317、nd investment networks are likely to limit technology transfers,slowing productivity growth.Fixed investment is likely to be further discouraged by re-duced access to international financial markets and increased economic and po-litical uncertainty,and emigration is likely to be a drain on human cap
318、ital.UkraineRussias invasion of Ukraine has dealt an unimaginable toll on the people of Ukraine and the countrys economy,with activity contracting by a staggering 29.2 percent in 2022.The contraction in growth is less severe than previously projected,with output supported by the reopening of Ukraine
319、s Black Sea ports and resumption of grain trade,as well as substantial donor support.In 2023,output is projected to increase by 0.5 percent,albeit from the low levels resulting from the economic destruction created by the war.Growth esti-mates for 2023 assume that economic activity achieved in the f
320、ourth quarter of 2022 will continue in the medium term,with growth in sectors focused on sup-plying the domestic market and meeting wartime needs balancing out a pro-jected 15 percent contraction in agriculture.Following Russias attacks on Ukraines power grid in the fourth quarter of 2022,missile at
321、tacks by Russia in March pose renewed downside risks to infrastructure stability.If Ukraine were to lose power,it would further paralyze Ukraines economy,increase demand for energy imports,and inhibit war efforts.28 World Bank ECA Economic Update Spring 2023Sources:Darvas,Martins,and McCaffrey(datab
322、ase);Eurostat(database);Haver Analytics;McWilliams,Sgaravatti,and Zachmann(database);TurkStat(database).a.Figure shows crude oil production in million barrels per day.Last observation is December 2022.b.Figure shows percent comprised by each country listed of total Russia mineral fuel exports.“Other
323、s”includes Japan,South Korea,the United King-dom and the United States.c.Chart demonstrates cubic meters in billions of gas imports to the European Union(EU27)from the Russian Federation by exporting route.The Yamal route is via Poland and Belarus.Last observation is the week of March 26,2023.d.Colu
324、mns show value added by sector of activity of affected NUTS-2 subregions for 2015.Diamonds are based on nominal GDP data for 2019.9101112FebMarAprMayJunJulAugSepOctNovDec2019202020212022Millions of barrels per dayJan048121620Jan-2019Apr-2019Jul-2019Oct-2019Jan-2020Apr-2020Jul-2020Oct-2020Jan-2021Apr
325、-2021Jul-2021Oct-2021Jan-2022Apr-2022Jul-2022Oct-2022EU27ChinaIndiaTrkiyeOthersPercentYamalUkraine Gas TransitTurkish streamNord StreamCubic metres,billions012345678910TR62TR63TRB1TRC1TRC2Agriculture,forestry and fishingManufacturingServicesShare of Trkiye GDPPercent of total value added00.51.01.52.
326、02.53.03.5Jan-21Mar-21May-21Jul-21Sep-21Nov-21Jan-22Mar-22May-22Jul-22Sep-22Nov-22Jan-23Mar-23FIGURE 1.8 Recent developments in major economiesa.Russian oil productionb.Largest importers of Russian mineral fuelsd.Trkiyes NUTS-2 subregions affected by the 2023 earthquakes,value added by sector c.Euro
327、pean Union imports of Russian gasGrowth is projected to increase further over 202425 to an average 5 percent,with underlying projections assuming that the hostilities cease in mid-2024.However,the outlook is subject to extraordinary uncertainty given the vicious war and overlapping global challenges
328、.After more than a year since the start of Russias invasion,with nearly 9 mil-lion refugees outside the country and more than 5 million internally displaced people,the country has settled into a war economy that is smaller,structurally changed in favor of defense industries,more focused on providing
329、 supplies for the war effort,with much larger government employment,and stepped-up redis-tribution of private sector assets(UNHCR 2023).Public finances have been under Part 1:Recent Developments,Policies,and Outlook 29severe pressure,with a substantial increase in spending needs for defense and soci
330、al expenditures,combined with modestly reduced revenues,resulting in a fiscal deficit of 25 percent of GDP(excluding grants)in 2022.In March 2023,the World Bank published an updated assessment of the dam-age and economic losses from the war covering the one-year period from Russias invasion of Ukrai
331、ne on February 24,2022(World Bank et al.2023).The report estimates that direct damages exceed$135 billion,with housing,transport,en-ergy,and commerce and industry being the most affected.Lossesdisruptions to economic flows and productionhave been estimated at around$290 billion,and estimated total r
332、econstruction and recovery needs at about$411 billion(or double 2021 GDP).The economic toll suffered by Ukraine as a result of the invasion is difficult to grasp through available data.Wars inflict particularly severe damage to produc-tivity,generating adverse effects on long-term growth prospects t
333、hrough the de-struction,disruption,and diversion of labor and capital(Dieppe,Kilic Celik,and Okou 2020).Over 30 percent of Ukraines infrastructure has been damaged,with entire cities destroyed.Nearly 8 million children have been negatively impacted by the unavailability of schools,hospitals,and energy.The inability of children to engage in schooling threatens a stark depreciation in long-term huma
全部分类
免费下载资料库
10000份+资源包
千万vip文档畅享下载
下载文档文件编辑即用
网站精选百万好案
百万工程地产工作者都在用
微信扫一扫登录
