europe & central asia outlook, jan 2014

Mizuho KidaWorld Bank

January 2014

Global Economic Prospects January 2014

Europe & Central Asia Region

www.worldbank.org/globaloutlook

Growth in the ECA region has strengthened in 2013 to 3.4% up

from 2% in 2012.

Growth in the Europe & Central Asia region has strengthened in 2013 to

3.4% up from 2% in 2012.

Growth strengthened in the region supported by increases in external demand

Quarterly GDP (% change, sa)

Growth strengthened in the region supported by increases in external demand

Quarterly GDP (% change, sa) Export volume (% change, 3m/3m, sa)

Growth strengthened in the region supported by increases in external demand

Quarterly GDP (% change, sa) Export volume (% change, 3m/3m, sa)

Among the Commonwealth of Independent States, growth performance has been mixed.

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Energy-commodity exporters maintained a strong growth

Azerb

aijan

Kazak

hsta

n

Albenia

Georg

ia

Armen

ia

Uzbek

istan

Ukrain

e

Hunga

ry

Bulgar

ia

Belaru

s

Kyrgy

z Rep

ublic

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0 Impact of commodity price changes on trade balance (%GDP, 2013)

Among the CIS countries, strong remittance inflows partially mitigated terms of trade shocks

Tajikis

tan

Kyrgy

z Rep

ublic

Mold

ova

Armen

ia

Georg

ia

Bosnia

& H

erze

govin

a

Mon

tene

gro

Serbia

Albania

Ukrain

e0

10

20

30

40

50

60

Remittances (%GDP, 2013)

Capital inflows to the region began strong, but weakened after the mid-year tapering

announcement and ensuing volatility.

Capital inflows to the region began strong, but weakened after the mid-year tapering announcement and ensuing volatility

1 2 3 4 5 6 7 8 9 10

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2009 2010 2011 2012 2013

Gross Capital Flows to ECA (US$ mn)

Across the region, the banking sector remains weak, saddled with an overhang of non-performing loans

Ukrain

e

Kazak

hsta

n

Serbia

Albania

Bulgar

ia

Roman

ia

Pakist

an

Seneg

al

Hunga

ry

Mon

tene

gro

Mold

ova

Sierra

Leo

ne

Tajikis

tan

Bosnia

& H

erze

govin

a

Ghana

Nigeria

Egypt

, Ara

b Rep

.

Mac

edon

ia, F

YR

Kyrgy

z Rep

ublic

Russia

0

5

10

15

20

25

30

35

40

45

Bank nonperforming loans to to-tal gross loans (%)

Across the region, the banking sector remains weak, saddled with an overhang of non-performing loans

Ukrain

e

Kazak

hsta

n

Serbia

Albania

Bulgar

ia

Roman

ia

Pakist

an

Seneg

al

Hunga

ry

Mon

tene

gro

Mold

ova

Sierra

Leo

ne

Tajikis

tan

Bosnia

& H

erze

govin

a

Ghana

Nigeria

Egypt

, Ara

b Rep

.

Mac

edon

ia, F

YR

Kyrgy

z Rep

ublic

Russia

0

5

10

15

20

25

30

35

40

45

Bank nonperforming loans to to-tal gross loans (%)

Across the region, the banking sector remains weak, saddled with an overhang of non-performing loans

Ukrain

e

Kazak

hsta

n

Serbia

Albania

Bulgar

ia

Roman

ia

Pakist

an

Seneg

al

Hunga

ry

Mon

tene

gro

Mold

ova

Sierra

Leo

ne

Tajikis

tan

Bosnia

& H

erze

govin

a

Ghana

Nigeria

Egypt

, Ara

b Rep

.

Mac

edon

ia, F

YR

Kyrgy

z Rep

ublic

Russia

0

5

10

15

20

25

30

35

40

45

Bank nonperforming loans to to-tal gross loans (%)

Across the region, the banking sector remains weak, saddled with an overhang of non-performing loans

Ukrain

e

Kazak

hsta

n

Serbia

Albania

Bulgar

ia

Roman

ia

Pakist

an

Seneg

al

Hunga

ry

Mon

tene

gro

Mold

ova

Sierra

Leo

ne

Tajikis

tan

Bosnia

& H

erze

govin

a

Ghana

Nigeria

Egypt

, Ara

b Rep

.

Mac

edon

ia, F

YR

Kyrgy

z Rep

ublic

Russia

0

5

10

15

20

25

30

35

40

45

Bank nonperforming loans to to-tal gross loans (%)

Across the region, the banking sector remains weak, saddled with an overhang of non-performing loans

Ukrain

e

Kazak

hsta

n

Serbia

Albania

Bulgar

ia

Roman

ia

Pakist

an

Seneg

al

Hunga

ry

Mon

tene

gro

Mold

ova

Sierra

Leo

ne

Tajikis

tan

Bosnia

& H

erze

govin

a

Ghana

Nigeria

Egypt

, Ara

b Rep

.

Mac

edon

ia, F

YR

Kyrgy

z Rep

ublic

Russia

0

5

10

15

20

25

30

35

40

45

Bank nonperforming loans to to-tal gross loans (%)

Across the region, the banking sector remains weak, saddled with an overhang of non-performing loans

Ukrain

e

Kazak

hsta

n

Serbia

Albania

Bulgar

ia

Roman

ia

Pakist

an

Seneg

al

Hunga

ry

Mon

tene

gro

Mold

ova

Sierra

Leo

ne

Tajikis

tan

Bosnia

& H

erze

govin

a

Ghana

Nigeria

Egypt

, Ara

b Rep

.

Mac

edon

ia, F

YR

Kyrgy

z Rep

ublic

Russia

0

5

10

15

20

25

30

35

40

45

Bank nonperforming loans to to-tal gross loans (%)

Growth outlook for the region is that of sustained gradual acceleration, from 3.4% in 2013 to 3.8% by 2016.

Growth outlook for the region is that of sustained gradual acceleration, from 3.4% in 2013 to 3.8% by 2016.

Growth outlook for the region is that of sustained gradual acceleration, from 3.4% in 2013 to 3.8% by 2016.

Growth outlook for the region critically depends on recoveries in Europe and Russia

Hungary

Romania

Kosovo

Croatia

Macedonia, FYR

Moldova

Armenia

Belarus

Ukraine

Tajikistan

Kyrgyz Republic

0 10 20 30 40 50 60 70 80

Exports to the Euro Area(percent of total exports, 2012)

Belarus

Moldova

Lithuania

Kazakhstan

Poland

Turkey

Czech Republic

Bulgaria

Macedonia, FYR

Albania

0 10 20 30 40

Exports to Russia(percent of total exports, 2012)

Mizuho KidaWorld Bank

January 2014

Global Economic Prospects January 2014

Europe & Central Asia Region

www.worldbank.org/globaloutlook