WB urges pro-poor social reforms as poverty and joblessness rises

PanARMENIAN.Net - 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 Houérou, 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.