WASHINGTON, January 9. /TASS/. Mounting tension around Syria and Ukraine may trigger new sanctions and undermine confidence in the region, the World Bank said in a report released on Tuesday.
The World Bank’s January 2019 World Economic Outlook is titled "Global Economic Prospects. Darkening Skies."
"Increases in policy uncertainty could undermine confidence in the region and impact growth. A slowdown or reversal of ongoing structural reforms remains a risk in many countries in the region, especially in Armenia, Azerbaijan, Belarus, Ukraine and Turkey. Tension concerning Syria or Ukraine could trigger new sanctions," the World Bank wrote about the risks for the development of economies in Europe and Central Asia.
"The most important downside risk is the possibility that the recent financial stress in Turkey worsens and triggers widespread bank failures," according to the report.
"While direct linkages between Turkey and the rest of the region are small, an intensification of financial stress in Turkey or other EMDEs could also lead investors to re-evaluate their exposure in the region, which in turn could lead to capital outflows, currency depreciations, and rising borrowing costs," the authors of the report stressed.
"Public debt, which remains high despite recent declines, and private borrowing in foreign currencies makes Central European countries vulnerable to financial pressure," according to the report.
The authors of the report note that in 2018, the economic growth in Europe and Central Asia fell to an estimated 3.1% "driven by a slowdown in Turkey and in Central European economies in the second half of the year.
"Excluding Turkey, regional growth remained unchanged at an estimated 2.9% in 2018, as slowing activity in countries in the western part of the region, such as Bulgaria and Romania, offset an acceleration in the eastern part of the region that benefitted from higher oil prices," the analysts noted.