In 2026, economic growth in the developing countries of Europe and Central Asia (ECA) is likely to slow substantially this year because of the impact of the conflict in the Middle East, geopolitical tensions, and trade fragmentation, says the World Bank Group's ECA Economic Update, released this week.

The report’s special section examines how countries can use industrial policy to accelerate economic growth and create jobs.

Learn more about the report’s findings: https://bit.ly/4chWVWa   

In the ECA region, growth is expected to weaken to 2.1% in 2026. Growth in Russia is expected to slow to 0.8%, while the pace of expansion elsewhere is likely to ease to 2.9% with higher energy costs tempering the growth of consumption and uncertainty affecting investment.

A protracted and more intense conflict in the Middle East remains a key downside risk, with the potential to severely disrupt global energy and fertilizer supply that can push energy and food prices much higher and dampen regional growth more substantially.

Central Asia, including the economies of Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan, remains the ECA’s fastest growing sub-region. Growth increased to 7% in 2025 from 5.8% in 2024, marking the fastest expansion in 14 years.

Household consumption held up well as real wages rose twice as fast as in the other countries in ECA, remittances surged, and consumer credit expanded strongly.

In Uzbekistan, growth picked up substantially to 7.7% in 2025 from 6.7% in 2024, supported by higher gold prices, strong investment growth, rising real wages, credit expansion, and ongoing structural reforms. Remittance inflows to the country rose by about 37% to about $18.9 billion (around 13% of GDP), with Russia accounting for 78% of transfers.

In Kazakhstan, growth increased to 6.5% in 2025, its highest pace since 2011, driven by domestic consumption, and large-scale government infrastructure spending. Meanwhile, record crude oil production boosted exports, reinforcing the upswing.

In 2025, supported by strong real GDP growth, Uzbekistan (7.7%) ranked among the top three fastest-growing economies, alongside the Kyrgyz Republic (11.1%) and Tajikistan (8.4%), among more than 20 developing countries in the ECA region.

Central Asia is projected to remain the fastest-growing subregion in ECA, despite an expected slowdown in growth. Growth is expected to decline to 4.9% in 2026–27 on average from 7% last year as the expansion of oil production in Kazakhstan slows despite higher global commodity prices.

In 2026, Uzbekistan (6.4%), Tajikistan (6.5%), and the Kyrgyz Republic (6.1%) are projected to remain among the top three fastest-growing economies in the ECA region. Real GDP growth in Kazakhstan is forecast at 4.6%.

Central Asia is likely to feel the drag from weaker growth in Russia, although high gold prices could help cushion the impact. Sustained large infrastructure outlays, especially on transport and energy, are likely to continue to support growth.

Learn more about the outlook for ECA economies: https://bit.ly/3QvBvxq