Central Europe needs reforms to boost slowing growth potential, IMF says
SPY•The IMF said Central and eastern European countries need reforms to strengthen growth amid demographic pressures and competition from Chinese exports. The region’s medium-term growth outlook has fallen to an average 2.5% by 2026, from around 5% before EU accession.
1. Growth outlook weakens
The region’s medium-term growth outlook has fallen to an average 2.5% by 2026 from around 5% before countries joined the European Union, IMF regional representative Carlos Mulas-Granados said. The region’s share of EU economic growth fell to 27% between 2020 and 2026 from 30% before the COVID-19 pandemic, partly because of weaker export prospects in Germany.
2. Reforms and new engines
Mulas-Granados called for trade diversification, higher labour market participation among young, female and elderly workers, and faster AI innovation and preparedness. He also said countries should develop energy, climate and defence sectors as growth engines, and that the EU’s next budget could help the region transform its growth model.
