Regional Economic Issues

Economic growth remains solid in much of Central, Eastern, and Southeastern Europe (CESEE). Given mediocre prospects for potential growth and a cyclical rebound near completion outside the CIS, current growth may be difficult to sustain. While some risks to the outlook have diminished, downside risks still dominate. Some risks, such as the pace of monetary normalization in key advanced economies and the refugee crisis in Europe, appear less prominent than six months ago. Other risks, however, such as those associated with rising political discord, have become more pronounced.Policies need to strike the right balance between supporting near-term growth and rebuilding fiscal buffers. Policies need to strike the right balance between supporting near-term growth and rebuilding fiscal buffers.