In the first half of the year, there was moderate growth in trade, largely driven by anticipatory purchases ahead of potential tariff increases. Although global financing conditions improved, sovereign spreads narrowed, and stock markets strengthened, the region still faces external risks. Weak economic performance in the eurozone and uncertainty in trade policy negatively affect exports, particularly in the automotive sector of Central Europe and the Western Balkans.
In the second half of 2025, inflation, which initially slowed, accelerated again.
Price increases were driven by rising costs of food and utilities, especially in Romania and Central Asia, as well as high wage growth. Most central banks preferred to maintain their existing monetary policy rates.
According to the World Bank's forecasts, economic growth in ECA is expected to remain at 2.4% in 2026. Domestic demand is anticipated to be supported by declining inflation, improved financial conditions, as well as increased defense spending and the utilization of EU funds. A moderate recovery in export volumes is expected in 2027.
Excluding Russia, Turkey, and Ukraine, the growth rates of the region's countries are projected to be around 3.1% in 2026-2027. However, forecasts also indicate serious demographic challenges, such as an aging population and slowing labor force growth. By 2050, the demographic dependency ratio could reach 63%.
The risks to these forecasts remain high. Increased trade tensions, prolonged geopolitical conflicts, and a potential rise in global interest rates could negatively impact economic performance. At the same time, if the conflict in Ukraine ends sooner, it could accelerate investments in recovery and boost investor confidence.
Overall, the global economy remains resilient: expected growth in 2026 is projected at 2.6%, and in 2027 at 2.7%. However, a quarter of developing countries are still in a more difficult position than they were in 2019.
