Stagnant Eurozone Economy to Hamper Growth in CESEE Region, IMF Says

The strongest impediment to growth of the economies of Central, Eastern, and Southeastern Europe (CESEE) this year and next would be stagnation in the euro zone, which is the largest trading partner for many of them, the International Monetary Fund (IMF) has said.

"Also, Prospects for CESEE countries would be dampened by lower-than-expected growth in the United States and China, and tighter financial conditions around the world," the IMF said in its latest Regional Economic Issues report for the regionon Friday

The global lender also said that "political instability and the rise of populist parties aggravate uncertainty throughout the region".

With average growth rates across the CESEE well below the pre-crisis levels, it could take longer to catch up with advanced Europe, according to the IMF.

Therefore, structural reforms offer the best hope for CESEE to lift growth and speed up convergence at a time when the global economy faces "mediocre growth prospects over the medium term".

CESEE countries need to improve labour supply, boost investment, and increase efficiency in order to meet the goal of closing the gap with advanced Europe faster, the IMF said.

For Southeastern Europe, which comprises EU Member States Bulgaria, Croatia and Romania in the report, the IMF projects real economic growth of 3.5% for 2016 and 3.1% for 2017.