The World Bank (WB) predicts a slowdown in economic growth in Europe and Central Asia in 2022 after a significant recovery this year, according to the WB Europe and Central Asia Economic Update, Report informs.
“Economic activity in the emerging and developing countries of Europe and Central Asia (ECA) is expected to grow 5.5 percent in 2021, higher than initially projected due to a stronger-than-anticipated recovery in external demand in the first half of the year, as well as strengthening domestic demand due to vaccinations and support packages,” reads the report.
The boost to exports, however, is already fading due to the ongoing global and regional spread of more contagious COVID-19 variants, which has also dampened the recovery in domestic demand.
“The pace of recovery in 2022 is forecast to be 3.4 percent, as external demand and commodity prices further stabilize, global growth plateaus, and macroeconomic policy support is withdrawn. The outlook remains highly uncertain given the continuation of the pandemic, unequal vaccine access, and vaccine hesitancy. The regional recovery has been accompanied by a rapid acceleration in inflation and remains vulnerable to financial stress, which could be triggered by an abrupt tightening of external financing conditions or a sharp rise in policy uncertainty and geopolitical tensions,” the WB noted.