Stabilisation in the eurozone will break the stagnation of emerging economies in Europe, according to a forecast European Bank for Reconstruction and Development (EBRD) economists.

The EBRD’s regional outlook, published in January 2013, shows signs of cautious optimism, with the bank predicting 3.1% growth in the parts of Europe, central Asia, the Middle East and north Africa that it is present in, up from 2.6% in 2012.


The report states that in the short term, economic relations between the eurozone and the emerging economies will remain rocky due to fiscal and credit contraction, but could rebound eventually, thanks to a combination of the European Central Bank’s low interest rate policy, growth in equity markets and the renewed stability in the financial and interbank markets.

The EBRD’s chief economist, Erik Berglof, said that based on the recent developments in the eurozone “it is too early to sound all-clear but there are signs of stabilisation”. The EBRD assessment of the recent developments in the eurozone is favourable. However, the bank notes that the process of economic improvement in the EU will be “very slow and gradual”.

The EBRD is also predicting that the rate of recovery and growth will be slower than in 2011. The Turkish economy is expected to grow by 3.7% in 2013, down from 8.5% in 2011, while in Russia the expected figure is 3.5%, down from 4.3%. The Balkans are expected to grow by only 1.5%, albeit from a low 0.5% in 2011, while central and eastern Europe and the Baltics are forecasted to remain at 1.2%. The report noted that, despite the positive signals from the eurozone, the countries that are the most integrated with euro area will continue to record weak growth.

Elsewhere in the regions covered by the EBRD, economies in the Middle East and north Africa are forecast to perform better than in the past two years, while the outlook for central Asia is less positive. The former are expected to continue with a stabilisation process after the Arab Spring uprisings of 2011, while the report noted that the central Asian countries might feel the impact of economic slowdown in Russia, which would lead to the rate of remittances coming from Russia to the region to decline.