“Economic slowdown in 2025” - Which EBRD regions will be most affected?
The Western Balkans, the Baltic states and Central Europe are expected to experience the biggest slowdown in economic growth, according to the European Bank for Reconstruction and Development.
The Western Balkans' Gross Domestic Product is expected to be 3.2% in 2025, before increasing slightly to 3.4% next year, mainly due to Serbian political unrest, as well as spillover effects from slowing growth in the most advanced economies of Western Europe.
Serbia, North Macedonia, Bosnia and Herzegovina, and Montenegro are expected to be some of the most affected countries in the Western Balkans this year.
Economic growth for Central Europe and the Baltic States is forecast to be 2.4% this year and 2.7% in 2026. This is mainly due to the effect of new tariffs and slower external demand, especially from Germany, as well as higher global policy uncertainty.
The Slovak Republic, Estonia and Hungary are expected to be the hardest hit, experiencing the sharpest downward revisions from the EBRD's February 2025 forecasts.
As for the economies of the southeastern EU, GDP will grow by 2% in 2025, which would be an expansion from 1.6% in 2024, but would still be less than previously forecast. This recovery will be driven mainly by Bulgarian demand. In 2026, GDP is expected to be 2.4%.
This year, Central Asia's economic growth will slow to 5.5%, with a further decline to 5.2% expected in 2026. Falling commodity prices could dampen the economic growth of Mongolia and Kazakhstan.
Economic growth in the Southern and Eastern Mediterranean could be 3.6% this year, before expanding slightly to 3.9% in 2026.
Turkey's GDP is expected to fall from 3.2% last year to 2.8% this year, mainly due to tighter-than-expected monetary policy and slower external and domestic demand. However, economic growth is likely to return to 3.5% in 2026.
GDP is forecast to be 3.5% in 2025 in Eastern Europe and the Caucasus, before rising to 4.3% in 2026, although ongoing damage to Ukraine's energy infrastructure and weaker EU demand could hurt Moldova's and Ukraine's prospects.
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