WB URGES PRO-POOR SOCIAL REFORMS AS POVERTY AND JOBLESSNESS RISES
April 26, 2010 – 13:36 AMT 08:36 GMT
The Emerging Europe and Central Asia (ECA) Region will face a slow
recovery from the global economic crisis in the year ahead and
countries facing tight fiscal pressures should take care to target
social spending on the most needy and vulnerable, the World Bank said
at a press briefing at the World Bank/IMF Spring Meetings.
"Countries of Emerging Europe and Central Asia were hit the hardest by
the global economic crisis and are likely to be the slowest to resume
economic growth," said Philippe Le Houerou, World Bank Vice President
for the Europe and Central Asia Region. "Growth in the Region, which
had peaked at about 7 percent in 2007, fell to a negative 6 percent
in 2009. 2010 is going to be a tough year for the Region with growth
projected at around 3 percent. The prospects for 2011-2013 are only
slightly better. Rising joblessness is pushing households into poverty
and making things even harder for those already poor."
Emerging Europe and Central Asia is a diverse region. Differentiation
among countries resulted in varying degrees of impact that the crisis
has had on individual countries and will also define their prospects
for recovery. 20 out of 30 countries in the Region experienced a
decline in GDP in 2009, with GDP growth ranging from a negative 18
percent in Latvia to a positive 9.3 percent in Azerbaijan.
Overall, countries in the Emerging Europe and Central Asia Region will
recover from the crisis more slowly than in other regions. According
to the World Bank, current growth projections for 2011-2013 show the
Region growing between 3 and 4 percent, as compared to approximately
5 percent in the Middle East and about 8 percent in developing Asia.
2010 is expected to be particularly difficult for Europe and Central
Asia, with GDP growth forecasts about half of the forecast for the
rest of the developing world.
The World Bank reports that the Region has faced the greatest fiscal
pressures among all the world’s regions during the global economic
crisis. Average fiscal deficits amounted to 6 percent of GDP in
Emerging Europe and Central Asia between 2008 and 2009, compared with
1 percent in the Middle East, 3 percent in Latin America, and about
4 percent in developing Asia and Africa.
The global economic crisis has taken a heavy toll on the Region’s
poverty reduction accomplishments of the last decade. The number of
poor and vulnerable has risen by about 13 million in 2009, instead of
falling by 15 million as expected before the crisis, with Armenia,
Georgia, the Kyrgyz Republic, and Moldova particularly hard hit. As
a result, 40 million people in Emerging Europe and Central Asia live
below $2.50 per day, and about 160 million below $5 per day. Also,
joblessness has been rising across the Region, with middle-income
countries seeing greater increases in unemployment. According to
the World Bank, the unemployment rate in 2009 exceeded 10 percent in
Estonia, Hungary, Latvia, Lithuania, the Slovak Republic, and Turkey.