Economic growth in Europe and Central Asia has slowed but the region remains resilient despite ongoing global and regional challenges, according to a World Bank press release issued on October 7, 2025.
Regional GDP is expected to grow by 2.4 percent in real terms this year, down from 3.7 percent in 2024. The slowdown is primarily driven by a weaker pace of expansion in the Russian Federation.
Excluding Russia, which accounts for about 40 percent of the region’s output, growth is likely to remain relatively stable at about 3.3 percent this year and next.
Bold Reforms Needed
“Developing economies in the region need to undertake bold reforms to translate resilience into stronger growth in productivity, output, and jobs that fit with the region’s shifting demographics and capitalize on their natural advantages,” said Antonella Bassani, World Bank Vice President for Europe and Central Asia.
Bassani emphasized the importance of strengthening private sectors, improving education, and enhancing connectivity internationally, regionally, and domestically, while attracting more private capital.
“The region’s challenge is to increase job opportunities and transform low-skill jobs into high quality employment,” she added.
Infrastructure and Business Environment Key to Job Creation
In a special focus on jobs, the report finds that investing in infrastructure, improving the business environment and mobilizing private capital will be critical to jumpstarting productivity.
Countries need to begin by investing in the foundation for jobs—physical and human infrastructure. Improving the quality of education, particularly vocational and higher education, is also necessary.
There is still untapped potential among women and young people, who are underrepresented in the labor force.
Job Quality Concerns
The region has created significant jobs over the last decades, yet slowing growth, lagging productivity and weak reform momentum are amplifying job challenges.
While employment in ECA has increased by 12 percent over the last 15 years, particularly in services which now account for more than half of jobs, the report finds that most opportunities have been in relatively low-skilled jobs with limited earning potential.
Demographic Pressures Mount
Demographic headwinds threaten labor market resilience. The working-age population is projected to decrease by 17 million over the next decades, a decline concentrated in Eastern and Central Europe and the Western Balkans.
In Central Asia and Türkiye, the working-age population will grow, putting a different kind of pressure on the labor market.
Structural impediments limit ECA’s potential, such as the abundance of small firms that rarely scale up, undeveloped credit and venture finance markets, underperforming education and training systems, subdued competition, and state-owned enterprises (SOEs) that dampen business dynamism and market efficiency.
Tailored Solutions for Each Country
“Each country can tailor its approach to best use its assets—human talent, physical infrastructure, institutions, and natural resources,” said Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia.
“Expanding job opportunities can benefit nearly all workers as different industries require different skillsets. Focusing on these areas gives policymakers a real chance to tackle the jobs challenge and generate growth,” Izvorski added.
The complete World Bank report on Jobs and Prosperity in the Europe and Central Asia region is available at /// nCa, 27 October 2025 (infographics by nCa)
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