E Europe at critical healing stage; C Asia to see moderate growth: DNB

As Eastern Europe confronts geopolitical and labour market challenges, its focus on digital transformation, infrastructure investment and human capital development will be essential in ensuring long-term economic resilience, the DNB document noted.

Eastern Europe is projected to achieve gross domestic product (GDP) growth rates between 3 per cent and 4.5 per cent this year, supported by robust domestic consumption, a rebound in foreign investment and a gradual recovery in export markets.

Countries like Poland, Romania and the Czech Republic are expected to lead this growth, while nations like Russia, Belarus and Ukraine will experience war-driven economic demand.

The average inflation rate across Eastern Europe stands at approximately 4.5 per cent, a substantial reduction from prior peaks, largely attributable to declining energy prices and enhanced supply chain efficiencies.

Central banks in the region are adopting a cautious approach, likely maintaining steady or slightly reduced interest rates to support economic growth while managing inflation expectations.

As recovery gains traction, the average unemployment rate in Eastern Europe is projected to decline to around 5.5 per cent by the end of this year. This reflects a tightening labour market, with sectors like technology, healthcare and skilled trades experiencing significant labour shortages.

Eastern Europe is witnessing renewed foreign direct investment (FDI) inflows, bolstered by growing investor confidence, nearshoring, government incentives and strategic investments in key sectors.

The region is increasingly focusing on green energy transition, with significant investments anticipated in solar, wind and bioenergy projects.

Countries across Eastern Europe are actively diversifying their energy sources to enhance security and reduce reliance on Russian gas. This strategy involves increased investments in liquefied natural gas terminals, renewable energy infrastructure and energy efficiency measures. Such initiatives are not only pivotal for energy independence but also crucial for meeting environmental sustainability goals, the DNB report noted.

Central Asia is navigating a complex landscape shaped by geopolitical dynamics, climate challenges and demographic changes, the report said. The region is projected to see GDP growth rates ranging between 4 per cent and 5.5 per cent this year.

This growth is primarily supported by robust demand for natural resources, particularly oil, gas and minerals, which are vital to the economies of Kazakhstan and Turkmenistan.

Additionally, increasing domestic consumption and investment in infrastructure projects are expected to bolster growth across the region.

Uzbekistan and other countries are pursuing ambitious reforms aimed at enhancing economic productivity and attracting foreign investment, contributing to a more vibrant economic environment, the DNB report observed.

The average inflation rate in Central Asia is anticipated to stabilise at around 6.5 per cent in 2024, a moderation from previous peaks. This is attributed to improved supply chain conditions, lower food prices and the gradual easing of global energy prices.

Central banks across the Central Asian region are likely to maintain a cautious monetary policy stance, with most expected to keep interest rates steady to support growth while monitoring inflationary pressures.

The unemployment rate in Central Asia is projected to remain stable, averaging around 6 per cent by the end of 2024. Many citizens in the region seek employment opportunities abroad, especially in Russia and Kazakhstan.

Fibre2Fashion News Desk (DS)