By Fatih Dogan
ANKARA (AA) – Low oil prices, weak investments and a lack of sufficient structural reforms weigh on growth in European and Central Asian countries, the World Bank said in a report on Tuesday.
In its World Bank ECA Economic Update the institute said that “low oil and other commodity prices in the eastern half of the region, a decline in investment rates in the European Union, and ongoing structural challenges in all countries” are crippling growth performance.
“The region is expected to grow a modest 1.6 percent in 2016 -- up slightly from 1.4 percent in 2015 -- but declines in both incomes and consumption will likely mitigate this modest growth. This trend is projected to continue into 2017 and 2018, with growth forecast at 1.5 percent and 1.8 percent, respectively,” the bank said.
“The Brexit vote and the refugee crisis are testing European cooperation, while the eastern half of the region is still grappling to adjust to lower oil prices,” Hans Timmer, World Bank chief economist for the ECA region said, stressing how weak growth paved the way for unrest.
“Failure in the whole region to unleash new sources of growth is contributing to an increase in populism and polarization, as well as mistrust in institutions,” he warned.
Cyril Muller, World Bank vice president for the ECA region, said there was a need for strong policy responses in areas such as labor force flexibility, skills and ease of doing business.
“The modest growth we are seeing is a step in the right direction, but not enough to ease concerns of people in the region worried about their economic prospects,” Muller said.
“Governments can act now to help. For example, they can promote more life-long learning to help people find and keep good jobs. They can also provide child and elder care to facilitate more flexible employment choices. These actions can ensure equality of opportunity and boost overall growth,” he added.