GDP growth in Europe and Central Asia was uneven in 2012. In Central and Southeastern Europe, output declined, and growth is forecast to be anemic in 2013. In the Commonwealth of Independent States, recovery was more resilient, thanks largely to high commodity prices, but growth rates still remain below their precrisis levels. These countries and Turkey are forecast to grow about 4 percent in 2013.
World Bank assistance
The Bank approved $5.3 billion for the region for 42 projects this fiscal year. Support included $4.6 billion in IBRD loans and $729 million in IDA commitments. The leading sectors were Public Administration, Law, and Justice ($1.3 billion); Finance ($1.2 billion); and Transportation ($916 million). Lending was guided by a strategy based on three pillars: economic competitiveness, social inclusion, and climate action. In addition to its lending and technical assistance, the Bank produced important research on the region this fiscal year.
Middle-income countries requiring services that cannot be fully funded by the Bank’s own resources are increasingly using Reimbursable Advisory Services (RAS). Through RAS agreements, the Bank provides clients with analytic and advisory services to help advance their development objectives. In fiscal 2013, the Bank signed 35 RAS agreements with eight countries in the region, along with two regional RAS agreements, focusing on such issues as innovation, competitiveness, real estate modernization, agricultural administration, and governance.
Increasing economic competitiveness
Increasing competitiveness requires improving governance and the investment climate, providing stable and effective financial intermediation, upgrading the skills of the labor force, building and maintaining energy and transport infrastructure, and increasing the efficiency of public spending. To achieve these goals, the Bank has helped to modernize tax administration in Armenia and Romania; improve roads in Armenia and Serbia; improve the business environment and policies conducive to innovation in Croatia, Georgia, and the Russian Federation; increase access to finance for small and medium enterprises in Turkey; and stabilize public finances and strengthen financial sector regulations in the former Yugoslav Republic of Macedonia.
Findings in the regional report Eurasian Cities: New Realities along the Silk Road show that the cities of Eurasia need readjusting in order to be competitive in a market economy. Policy makers can support this transformation through better urban planning, faster transport and communication connections, integrated public services, and more efficient financing—actions some of the most progressive cities in the region have already undertaken.
Fostering social inclusion
The Bank is working with countries in the region to improve the efficiency of their social safety nets, adjust these programs so that they provide incentives for labor force participation, and increase access to better health care and education. In Armenia and Uzbekistan, it is helping to improve health services. In the Kyrgyz Republic and Moldova, it is working with the governments to improve the quality and accountability of schools.
The Bank focused attention on two long-term challenges in the region this fiscal year: jobs and pensions. It also published a regional report on health, Getting Better: Improving Health System Outcomes in Europe and Central Asia, which explores the challenges facing the health sector and identifies key policies for improving health system outcomes and achieving faster convergence with the world’s best-performing systems.
Addressing the challenges of climate action
Climate change is putting stress on the land, water, and energy resources in the region, which decades of environmental mismanagement have left highly vulnerable to even modest increases in global warming. To deal with the risks, the Bank is acting on a number of fronts. It is financing disaster risk mitigation and climate change mitigation in Moldova, supporting reforms to provide incentives for efficient energy use in Turkey, and investing in sustainable forest management and enhanced environmental resilience in Uzbekistan.
The Bank published four new studies on climate change in fiscal 2013. Growing Green: The Economic Benefits of Climate Action provides practical policy options for achieving a greener growth path by prioritizing investments in energy efficiency, expanding the use of cleaner energy, and improving natural resources management. Energy Efficiency: Lessons Learned from Success Stories analyzes the policies of countries in the European Union that have improved energy efficiency the most. Balancing Act: Cutting Energy Subsidies While Protecting Affordability demonstrates how to ensure that climate action supports social inclusion by addressing the social impacts of higher energy prices. Looking Beyond the Horizon: How Climate Change Impacts and Adaptation Responses Will Reshape Agriculture in Eastern Europe and Central Asia shows that priority measures for adapting to climate change can increase agricultural productivity and contribute to development goals.
|The regional report for Europe and Central Asia||PDF (161KB)|