Economic growth in Europe and Central Asia (ECA) has slowed but the region has demonstrated resilience despite ongoing global and regional challenges, according to the World Bank’s latest Europe and Central Asia Economic Update: Jobs and Prosperity. Regional GDP is projected to grow by 2.4 percent in 2025, down from 3.7 percent in 2024, largely due to weaker growth in the Russian Federation. Excluding Russia, which accounts for roughly 40 percent of regional output, growth is expected to remain stable at about 3.3 percent this year and next.
Antonella Bassani, World Bank Vice President for Europe and Central Asia, emphasized that developing economies in the region must undertake bold reforms to convert resilience into stronger productivity, output, and quality employment. Strengthening private sectors, improving education, enhancing domestic and international connectivity, and attracting private capital are essential steps. Expanding job opportunities and transforming low-skill positions into high-quality employment are central challenges given shifting demographics and labor market needs.
The report highlights that investing in physical and human infrastructure is critical for job creation. Enhancing the quality of vocational and higher education, addressing underrepresentation of women and youth in the labor force, and mobilizing private capital are key strategies to boost productivity and employment. While the region has added significant jobs over the last 15 years—particularly in services, which now account for over half of total employment—most of these roles remain low-skilled with limited earning potential.
Demographic trends present additional labor market challenges. The working-age population is expected to decline by 17 million over the coming decades, primarily in Eastern and Central Europe and the Western Balkans, while Central Asia and Türkiye will see population growth that will exert different pressures on job markets. Structural impediments—including small firms that rarely scale, underdeveloped credit and venture finance markets, weak education and training systems, limited competition, and state-owned enterprises that constrain market dynamism—further limit the region’s potential.
Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia, stressed that countries can tailor strategies to leverage their assets—human talent, physical infrastructure, institutions, and natural resources—to expand job opportunities. Targeted reforms and investments can help policymakers address employment challenges, unlock productivity gains, and generate sustainable economic growth across the region.
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