Since being hard hit by the global financial crisis, recovery has got underway for the European economies. Across Emerging Europe , GDP increased to 2.3% in 2013, from 1.4% in 2012, supported by strengthened economic activity, a growing number of exports, and strong trade and financial linkages with the Eurozone, the region’s main market for exports and the chief source of its investment and bank financing. Inflation remained subdued at 4.0% in 2013. Despite this slight recovery in growth, domestic demand remained sluggish as a result of ongoing banking-sector restructuring and tighter international financial conditions.
Emerging Europe has made important progress towards the MDGs: the proportion of poor has been halved since 1990, the target on access to water has been reached, and the region is on course to achieve universal primary education and gender equality. Nevertheless, the social impact of the 2008 crisis is still being felt. Unemployment rates - especially youth and long-term unemployment - remained high in 2013, with a negative impact on household and public budgets and on the achievement of the other MDGs. Additional action is needed to overcome the uneven progress among countries where some targets, such as maternal mortality and access to safe drinking water and proper sanitation, are still off-track.
To date, OFID has expanded its partnership to six countries in Emerging Europe, with the aim of helping them to sustain their growth momentum and achieve their development goals. During 2013, two countries - Bosnia and Herzegovina and Kosovo - benefited from OFID’s assistance. Totalling US$102.2m, these resources were delivered exclusively in public sector lending and all for projects in the transportation sector, which is a strategic focus for much of the region in view of its role in promoting integration and trade.