Shifting Priorities, Building for the Future in Emerging Europe and Central Asia published by The World Bank (2014)
“Heightened tensions between the European Union (EU) and Russia are a key downside risk to the regional forecast. Given the close economic interdependence between the EU and Russia, an escalation of sanctions would likely impose large economic costs and damage recoveries in both areas, with significant negative spillovers throughout the region. In addition, disorderly adjustments to higher global interest rates – either due to anticipated or actual monetary policy tightening in the United States or general increases in risk aversion – continue to pose a risk.
There are also clear downside risks from weaker domestic demand in the Central and Eastern Europe sub-region particularly in the Southern Europe, relating in the near term to devastating floods (especially in Serbia and Bosnia and Herzegovina) and in the medium term to still high unemployment, high private sector debt, and the slow recovery in bank lending amid high (and in some cases rising) nonperforming loans. Downside risks to commodity prices and potential weakening of remittance inflows from Russia represent a major source of uncertainty for developing CIS…”
