Finance
Developing Countries in Europe, Central Asia Face Slowdown, World Bank Says
Published by Global Banking & Finance Review®
Posted on April 8, 2026
3 min readLast updated: April 8, 2026
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Emerging and developing economies in Europe and Central Asia face a slowdown in 2026 to 2.1% growth due to a temporary energy price shock from the Iran conflict. Excluding Russia, growth edges slightly higher to 2.9%.
World Bank Reports Slowdown for Europe and Central Asia as Energy Prices Rise
World Bank Economic Outlook Amid Rising Energy Prices
By Jason Hovet
April 8 (Reuters) - Emerging and developing economies in Europe and Central Asia face a sharp slowdown this year under a scenario of a large but temporary rise in energy prices from the conflict in the Middle East, the World Bank said on Wednesday.
Impact of the Iran War on Global Oil Supplies
The Iran war, which broke out in late February, has hit global oil supplies and sent prices soaring, lifting companies' costs and hitting people at the fuel pump. Tehran and Washington agreed a two-week ceasefire late on Tuesday.
Risks to the Global Economy
In an updated outlook, the World Bank said the conflict posed a substantial risk to the global economy, including developing and emerging countries in Europe and Central Asia.
Countries Included in the Region
The region includes nearly two dozen countries from Kazakhstan and Uzbekistan in Central Asia to European Union members Poland and Romania, Albania and Serbia in the Balkans, and Russia, Turkey and Ukraine.
Winners and Losers: Exporters vs. Importers
While energy exporters are likely to benefit temporarily from rising commodity prices, most countries are energy importers and likely to face increased fiscal and current account pressure.
Growth Projections for the Region
As a whole, growth across the region is expected to slow to 2.1% in 2026, from 2.6% in 2025. Growth would be a touch higher at 2.9% if Russia were excluded, the World Bank said in its report. In January, the World Bank forecast growth of 2.2% for this year.
Energy Price Forecasts
The lender's baseline scenario sees Brent oil prices averaging $88–$100 per barrel this year, as well as higher gas and fertiliser prices.
Country-Specific Economic Outlooks
Russia
Russia's growth is forecast to slow to 0.8%, from 1.0% in 2025, despite higher oil and gas prices, with fiscal space remaining narrow under Western sanctions on Moscow for its 2022 invasion of Ukraine.
Fiscal Policy Response
"Any windfall gains from higher oil and gas revenues are likely to be used to contain the deficit, rather than finance additional spending," the World Bank said.
Ukraine
With the war continuing into a fifth year, Ukraine's growth is expected to slow to 1.2% from 1.8% in 2025.
Turkey
The lender sharply lowered its growth outlook for Turkey as higher energy and food costs weigh on consumption. Turkey's economy is now expected to grow 2.8% this year, compared to 3.7% in the World Bank's January report.
Poland
Polish growth was seen dipping to 3.1%. Both economies grew by 3.6% in 2025.
(Reporting by Jason Hovet in Prague, editing by Karin Strohecker and Kirsten Donovan)
Key Takeaways
- •The Iran war has driven up energy costs, straining growth in energy‑importing countries across the region.
- •Energy exporters may gain briefly, but importers face fiscal and current account pressures.
- •Growth projections are revised down: regionwide to 2.1%, Russia to 0.8%, Ukraine to 1.2%, Turkey to 2.8%, and Poland to 3.1%.
Frequently Asked Questions about Developing countries in Europe, Central Asia face slowdown, World Bank says
1Why are developing countries in Europe and Central Asia facing a slowdown?
Rising energy prices, driven by conflict in the Middle East, are increasing costs for companies and consumers in these regions.
2How does the Iran conflict affect Europe and Central Asia's economies?
The Iran war reduced global oil supplies, causing energy price spikes and fiscal pressure for most countries that are energy importers.
3What are the World Bank's oil price assumptions for this year?
The World Bank expects Brent oil prices to average $88–$100 per barrel, with higher gas and fertilizer prices.
4How are Turkey and Russia's economies affected?
Turkey’s growth outlook was downgraded to 2.8%, and Russia’s is expected to slow to 0.8%, both impacted by higher costs and ongoing conflicts.
