Cryptocurrencies and Blockchain

PART I
Economic Outlook

1 Economic Developments 
and Prospects

Overview
Growth is strong in Europe and Central Asia (ECA), stronger than at any time 
since the global financial crisis of a decade ago. GDP rose 2.7 percent, and annual 
private consumption rose 2.5 percent. Growth was especially strong in Central 
Europe and Turkey, but it was robust in other parts of the region as well. 
Growth has likely peaked, however. Increased capacity utilization, unemploy-

ment rates close to their 2007 levels, and average inflation now exceeding 2 per-

cent are all signals that growth is likely to decelerate. 
The peaking of growth raises several questions
• How well is the region prepared for a sharper than expected cyclical down-

turn? As fiscal deficits have fallen to an average 1.5 percent of GDP, fiscal 
policy could be used. But in most countries, monetary tightening would prob-

ably be more appropriate. 
• Why is the underlying structural growth so low? Growth in 2017 was 0.4 per-

centage points below the average growth rate between 2000 and 2007. The 
decelerating growth trend is associated with the shift toward services, the de-

cline in capital deepening, and a slower pace of measured total factor produc-

tivity (TFP). 
• Has the economic upswing been used to adjust to the new normal of digital 
technologies, more flexible employment contracts, and increased tradability 
of goods and services? An unfinished agenda remains in terms of rethinking 
social protection and facilitating private sector development in new, interna-

tionally competitive sectors. It is important that adjustments toward this new 
reality continue, even if the expected slowdown materializes or deepens. 

Cryptocurrencies and Blockchain