Economic growth in Europe and Central Asia (ECA) will accelerate slightly in 2017, following the stabilization of oil prices, benefitting the eastern half of the region, and a continued recovery in the western half of the region.
According to the latest ECA Economic Update, titled Trade in Transition, launched in Tbilisi, Georgia on May 11, regional growth is forecast at 1.9 percent for 2017, up 0.3 percentage points from an earlier forecast in October, and will remain a stable 1.8 percent in 2018.
The report also notes that policies focused on improving trade in the region are crucial for building on this modest growth. Trade has been vital in improving the lives of people in ECA. From the transition period in the 1990s to today, trade has promoted growth, created jobs, and granted access to various goods and services for millions of people.
Overall, the region has been resilient to the ongoing global slowdown in trade, with trade volumes continuing to grow twice as fast as Gross Domestic Product (GDP). The current slowdown of China’s exports has been the main driver of the global trade slowdown, but the reduced competitiveness of China’s exports has actually opened up new opportunities for ECA. According to the report, countries can best take advantage of these opportunities by embracing a new growth strategy focusing on these new job opportunities in sectors that are internationally competitive.
Three transitions are necessary to build on this strategy: 1) a continued shift to producing goods that can sell in international markets to drive a sustained shift from imports to exports; 2) a reorientation towards Asia, moving away from the intraregional trade that has defined ECA in recent decades; and 3) a shift away from goods toward services, such as tourism and software, where most future growth opportunities are.
