World Bank: Europe, Central Asia Growth to Slow to 2.1%

The World Bank has warned that economic growth in developing countries of Europe and Central Asia is likely to slow substantially in 2026. Regional growth is expected to weaken to 2.1%, driven by the impact of the Middle East conflict, geopolitical tensions, and trade fragmentation.

Key Risk Factors

The report identifies three primary risks: the Middle East conflict's effect on energy prices, regional geopolitical tensions, and the fragmentation of global trade networks. Together, these factors are constraining export opportunities and reducing foreign direct investment flows into the region.

India Remains an Exception

India is projected to grow at 6.6% in fiscal year 2026-27, maintaining its position as one of the world's fastest-growing major economies. However, higher energy prices caused by the Middle East conflict and supply chain disruptions are weighing on economic activity there as well.

Broader Economic Context

The Deloitte US economic forecast for Q1 2026 expresses cautious optimism but highlights growing global risks. The private equity sector is also undergoing a period of restructuring, with CEPR noting that buyouts are fundamentally reshaping economic landscapes across the region.