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Europe and Central Asia Economic Update, Spring 2023

Author

Listed:
  • Julia Renee Roseman Norfleet
  • Ivailo Izvorski
  • Michael M. Lokshin
  • Dorothe Singer
  • Iván Torre

Abstract

Economic growth slowed sharply last year in Europe and Central Asia, as Russia's invasion of Ukraine, a surge in inflation, and the sharp tightening of monetary policy and financing conditions hit private consumption, investment, and trade. The marked increase in food and energy prices boosted inflation to a pace not seen in 20 years. The burden of inflation was spread unevenly across households. The poorest households faced inflation that was more than 2 percentage points higher than the inflation faced by the richest households, with this difference exceeding 5 percentage points in some countries. Poverty and inequality rates derived from household-specific inflation rates differ from those based on the standard consumer price index (CPI) approach. These differences have important policy implications, because many programs use CPI–based inflation adjustments, which do not accurately capture changes in the cost of living of targeted populations. Output growth in the region is projected to remain little changed in 2023 but better than projected in January 2023, largely reflecting upgrades to the pace of expansion in Poland, Russia, and Türkiye.

Suggested Citation

  • Julia Renee Roseman Norfleet & Ivailo Izvorski & Michael M. Lokshin & Dorothe Singer & Iván Torre, "undated". "Europe and Central Asia Economic Update, Spring 2023," World Bank Publications - Reports 39617, The World Bank Group.
    • Handle: RePEc:wbk:wboper:39617
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    References listed on IDEAS

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