Domestic challenges and external risks will weigh on growth this year

Growth momentum lost steam in the first quarter of the year in South-Eastern Europe (SEE) amid domestic and external headwinds. The region expanded 3.5% annually in Q1, which was below Q4’s nearly-five-year high growth rate of 3.9%. Among the largest economies in the region, growth dynamics weakened slightly in Q1 in Turkey on the back of a deteriorating external sector and rising political uncertainty, which had a negative impact on investment. Moreover, the economic contraction worsened in Greece due to a broad-based deterioration, suggesting that the country is far from a quick turnaround from the crisis. On the upside,dynamics improved in Croatia, Romania and Serbia in Q1.

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