Europe and Central Asia - World Bank...** CIS includes Russia, Armenia, Ukraine and Kazakhstan, CEE...
Transcript of Europe and Central Asia - World Bank...** CIS includes Russia, Armenia, Ukraine and Kazakhstan, CEE...
Europe
and
Central Asia
Presentation by Laura Tuck,
Vice President, ECA;
and Hans Timmer,
Chief Economist, ECA.
April 9, 2014
Meetings
2
Emerging Europe And Central Asia
At a Crossroads
Growth outlook in 2014 for Emerging Europe and
Central Asia is much lower than what we expected—
particularly in the eastern part of the region—and is
projected to be the lowest among all developing
regions.
The region needs to pursue tough reforms to set the
stage for boosting shared prosperity and creating jobs.
This will also help build resilience to future shocks and
build the foundation for strong growth.
Political tensions may affect not only the Russian and
Ukrainian economies, but also other economies in the
region.
6.0
4.7 4.4
9.6
5.1
9.9
4.1
4.9
-0.7
8.3
4.6
7.2
2.6 2.4
1.5
7.4
3.5
4.2
2.5 2.1
2.6
7.2
4.7 4.8
2.3 1.9
3.3
7.1
5.3 5.2
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Latin America &Caribbean
Europe & CentralAsia
Middle East & N.Africa
East Asia & Pacific Sub-Saharan Africa South Asia
GDP Growth (%), weighted average by region
2010
2011
2012
2013
2014p
Economic Growth in ECA is expected to be the lowest among all
developing regions in 2014
Source: World Bank
High and low
case scenarios
3
Many CIS countries and Turkey’s growth
prospects have been revised down
2014 Real GDP Growth Projections
Note: CIS includes Georgia and Ukraine
-6
-4
-2
0
2
4
6
8
10
12
Cro
atia
Slo
ven
ia
Bulg
aria
Czech R
epu
blic
Hu
nga
ry
Ro
man
ia
Slo
vak R
epub
lic
Esto
nia
Pola
nd
Lithu
ania
La
tvia
Serb
ia
Bosnia
an
d H
erz
eg
ovin
a
Alb
ania
Mo
nte
neg
ro
FY
R M
ace
don
ia
Kosovo
Ukra
ine
Bela
rus
Ru
ssia
Mo
ldova
Kyrg
yz R
ep
ublic
Arm
enia
Geo
rgia
Aze
rbaija
n
Kazakhsta
n
Tajik
ista
n
Uzbe
kis
tan
Turk
men
ista
n
Turk
ey
EU 11 Western Balkans CIS + Turkey
2014 (April 2013 Projection) 2014 (April 2014 Projection)
4
….and there is a wide gap between high-case
and low-case scenarios, particularly for Ukraine,
Russia and Turkey
Note: CIS includes Georgia and Ukraine
-6
-4
-2
0
2
4
6
8
10
12
14C
roa
tia
Slo
ven
ia
Bulg
aria
Czech R
epu
blic
Hu
nga
ry
Ro
man
ia
Slo
vak R
epub
lic
Esto
nia
Pola
nd
Lithu
ania
La
tvia
Serb
ia
Bosnia
an
d H
erz
eg
ovin
a
Alb
ania
Mo
nte
neg
ro
FY
R M
ace
don
ia
Kosovo
Ukra
ine
Bela
rus
Ru
ssia
Mo
ldova
Kyrg
yz R
ep
ublic
Arm
enia
Geo
rgia
Aze
rbaija
n
Kazakhsta
n
Tajik
ista
n
Uzbe
kis
tan
Turk
men
ista
n
Turk
ey
EU 11 Western Balkans CIS + Turkey
2014 Real GDP Growth Range: High- and Low-case scenarios
5
Growth outlook in 2014 for Emerging
Europe and Central Asia is much lower
than what we expected—particularly in
the eastern part of the region—and is
projected to be the lowest among all
developing regions.
6
95.00
100.00
105.00
110.00Industrial Production Index* (January 2012=100)
CIS**
CEE**
WesternEurope
*The industrial sector includes manufacturing, mining, and utilities. Underlying data is in constant US$, seasonally adjusted.
** CIS includes Russia, Armenia, Ukraine and Kazakhstan, CEE includes Slovak Republic, Hungary, Poland, Bulgaria, Croatia
and Romania
Industrial Production has suddenly slowed for
the CIS countries
7
Spreads have increased in Turkey, Russia and Ukraine
Courtesy JPMorgan Index Research, Copyright 2014
150
350
550
750
950
1150
1350
150
200
250
300
350
400
450
Rusia Strip Sprd (bps) EMBI Global Brazil/China/India Strip Sprd (bps)
Turkey Strip Sprd (bps) Ukraine Strip Sprd (bps), right axis
BRICs less
Russia
Russia Turkey
Ukraine
8
Nominal exchange rates have weakened
-30
-20
-10
0
10
20
30
Cze
ch R
epublic
Hu
nga
ry
Ro
mania
Po
land
Cro
atia
La
tvia
Lith
uania
Alb
ania
Bu
lga
ria
Esto
nia
Slo
va
kia
Ma
ce
do
nia
, F
YR
Ka
zakhsta
n
Ru
ssia
n F
edera
tion
Ukra
ine
Be
laru
s
Kyrg
yz R
epublic
Ge
org
ia
Aze
rbaija
n
Arm
enia
Turk
ey
Emerging Europe CIS
Exchange Rate (LCU-US$, March 2014 / March 2013)
No
min
al D
eva
luatio
n
No
min
al A
pp
recia
tio
n
Note: CIS includes Georgia and Ukraine
9
The region needs to pursue tough
reforms to set the stage for boosting
shared prosperity and creating jobs. This
will also help build resilience to future
shocks and build the foundation for
strong growth.
10
ECA was the hardest hit and has been the
slowest to recover since the Crisis
Real GDP growth (%)
Source: World Bank
-8
-6
-4
-2
0
2
4
6
8
10
12
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014p
East Asia & Pacific Europe & Central Asia Latin America & Caribbean
Middle East & N. Africa South Asia Sub-Saharan Africa
11
Current Account balance as percent of GDP
Current account deficits remain large
compared to other regions
-15
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
East Asia
Europe & Central Asia
Latin America and the Caribbean
Middle East and North Africa
Sub-Saharan Africa
South Asia
Source: World Bank
*Excludes Russian Federation
**Excludes China 12
Ongoing banking sector weakness has
contributed to low private credit growth
Source: World Bank
Note: East Asia excludes China, CIS includes Georgia and Ukraine
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
16
Western Balkans EU 11 CIS RussianFederation
Turkey East Asia
An
nu
al
Gro
wth
of
Do
mesti
c C
red
it t
o P
riv
ate
Secto
r as a
sh
are
of
GD
P
NP
Ls %
of
To
tal L
oan
s
NPLs % of Total Loans, 2012 or latest
Annual Growth of Domestic Credit to Private Sector as a share of GDP, 2008-2012 average
13
Unemployment has stabilized at very high
levels across most of ECA economies
Source: Calculation based on ILO seasonally adjusted data.
0
2
4
6
8
10
12
14
16
18
20
22
2008 Q12008 Q22008 Q32008 Q42009 Q12009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q4 2011 Q12011 Q2 2011 Q32011 Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013 Q12013 Q2
Un
em
plo
ym
en
t ra
te (
late
st a
va
ilab
le)
CIS, UKR Western Balkans and Turkey Non-European OECD
Non-ECA Europe Baltics ECA
14
Which is putting downward pressure on prices
0
1
2
3
4
5
6
7
8
9
10
Consumer Price Index (Annual Rate of Change)
Euro area (18 countries) US and UK EU11 CIS Balkans Turkey
Note: CIS includes Georgia and Ukraine
15
While structural reforms took place, it has
slowed and large gaps remain for the CIS
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1
3.3
3.5
2000200120022003200420052006200720082009201020112012
Governance and Enterprise Restructuring
CIS Emerging Europe
EBRD Transition Indexes
The measurement scale for the indicators ranges from 1 to 4+, where 1 represents little or no change from a rigid centrally planned
economy and 4+ represents the standards of an industrialized market economy. CIS includes Georgia and Ukraine.
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2000200120022003200420052006200720082009201020112012
Large Scale Privatization
CIS Emerging Europe
16
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0Small Scale Privatization
CIS Emerging Europe
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Price Liberalization
CIS Emerging Europe
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Trade and Foreign Exchange System
CIS Emerging Europe
1.51.71.92.12.32.52.72.93.13.33.5
Competition Policy
CIS Emerging Europe
….including
CIS includes Georgia and Ukraine. 17
Resource-rich economies of CIS are facing head-
winds from soft commodities prices
-40
-30
-20
-10
0
10
20
30
40
50
2008 2009 2010 2011 2012 2013e 2014f 2015f 2016f
Commodity Prices, Actual and Forecast Changes
Non-oil commodities (percent change) Oil price (percent change)
Forecast
Source: World Bank
18
Political tensions may affect not only the
Russian and Ukrainian economies, but
also other economies in the region.
19
Lower growth in Russia likely to suppress
economic activity among trading partners
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Bela
rus
Ukra
ine
Mo
ldova
Arm
enia
Kazakhsta
n
Kyrg
yz R
ep
ublic
Tajik
ista
n
Turk
ey
Geo
rgia
Aze
rbaija
n
Slo
vak R
epub
lic
La
tvia
Esto
nia
Slo
ven
ia
Czech R
epu
blic
Lithu
ania
Pola
nd
Hu
nga
ry
Ro
man
ia
Bulg
aria
Ma
ce
don
ia, F
YR
Cro
atia
Bo
sn
ia a
nd
He
rze
go
vin
a
Alb
ania
Fin
land
Ita
ly
Icela
nd
Germ
any
Fra
nce
Sw
ede
n
Austr
ia
De
nm
ark
Spain
Belg
ium
Un
ite
d K
ing
dom
Gre
ece
Ne
therl
and
s
No
rwa
y
Sw
itzerl
and
Port
ug
al
Irela
nd
Ma
lta
Cypru
s
Lu
xe
mbo
urg
CIS + Turkey Emerging Europe Western Europe
Exports to Russia (% of total exports, 2012)
Note: CIS includes Georgia and Ukraine
20
-4
-2
0
2
4
6
8
East Asia &Pacific
Europe &Central Asia
Latin America &Caribbean
South Asia Sub-SaharanAfrica
Private Sector Investment (% of GDP)
Public Sector Consumption (% of GDP)
Public Sector Investment (% of GDP)
Private investment fell the most and can
disappoint further
Source: World Bank
Change 2007 to 2012
21
…to build economic resilience and set
the stage for a robust shared prosperity,
reinvigorating reforms is critical.
Bottom-Line….
ECA is at a cross-roads…
22
Thank You
23