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World Bank Warns Of 'Uncertain' Economic Outlook For Europe, Central Asia

The World Bank says that Europe and Central Asia continue to grapple with containing the coronavirus pandemic, which is clouding the economic outlook for the region.

The Washington-based lending arm of the International Monetary Fund (IMF) said in its latest Global Economic Prospects report, released on June 8, that economic growth for the 23 countries it groups in the region is projected to reach 3.9 percent in 2021, with firming external demand and elevated industrial commodity prices offsetting the negative impact of recent resurgences in new COVID-19 cases.

The World Bank warned, however, that the outlook remains “uncertain,” with uneven vaccine rollouts and the withdrawal of domestic macroeconomic support measures weighing on the regional recovery.

"Several countries in Central Asia, Eastern Europe, and the Western Balkans face bottlenecks related to the production, procurement, or delivery of vaccines secured through the COVAX facility or other agreements," the report noted.

“Growth could be weaker than projected if the pandemic takes longer than expected to abate, external financing conditions tighten, or policy uncertainty and geopolitical tensions rise further,” it said.

The report said that a resurgence of COVID-19 cases in early 2021 has interrupted the incipient economic recovery of many countries in the region and warned that “legacies of the pandemic, including slowdowns in physical and human capital accumulation, loom over the medium-term outlook if left unaddressed.”

The World Bank also noted that recent currency depreciations have put further upward pressure on prices, a growing concern for some economies that are still trying to shake off the effects of decades of Soviet-era planning.

“As a result of inflationary pressures, policy interest rates have been raised in one-third of the region’s economies thus far in 2021,” the bank said, pointing to Armenia, Belarus, Georgia, Kyrgyzstan, Russia, Tajikistan, Turkey, and Ukraine.

The Russian economy is projected to grow 3.2 percent in 2021, while the Western Balkans is expected to rebound to 4.4 percent annual growth. Central Europe is seen as the weakest area in the Europe-Central Asia region, with economic output seen expanding at just 1.9 percent this year.

The World Bank includes the following countries in its forecasts for the Europe and Central Asia region: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Hungary, Kazakhstan, Kosovo. Kyrgyzstan, Moldova, Montenegro, North Macedonia, Poland, Romania, Russia, Serbia, Tajikistan, Turkey, Ukraine, and Uzbekistan.

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