EBRD warns on stalling growth in emerging Europe and central Asia Economic prospects across emerging Europe and central Asia have taken a marked turn for the worse, with growth expected to slow particularly sharply this year in Russia, the European Bank of Reconstruction and Development has warned. Russia's economy will expand just 1.8 per cent this year, after 3.4 per cent growth in 2012, according to EBRD forecasts published at its annual meeting in Istanbul, Turkey. It blamed lower global demand for Russian energy supplies, public spending curbs and "possible dents to investor confidence" caused by the treatment of foreign investors and the business environment. In January, the EBRD had expected Russian growth of 3.5 per cent in 2013. Overall, the EBRD revised down its forecast for economic growth this year across its 34-country operating area - which covers central and eastern Europe, the Baltic states, the Caucasus, central Asia and southern Mediterranean countries - to 2.2 per cent from the 3.1 per cent forecast in January. The regional economy expanded by 2.6 per cent in 2012. For next year, the EBRD expected a re-acceleration to 3.2 per cent growth. The EBRD's downbeat tone contrasted with its relative optimism at the start of the year, when it appeared the worst of the region's slowdown was over, especially as the eurozone debt crisis was receding. Erik Berglof, chief economist, said: "The reasons for the slowdown in growth differ from country to country, but it should be a wake-up call across the region to re-energise structural reforms - reforms which have been on hold since before the global crisis." Poland's economy was expected to expand just 1.2 per cent this year, after 1.9 per cent in 2012, and the EBRB warned that its relatively high growth over the past few years "reflected a number of transient factors, including the rapid absorption of European Union structural funds and the ensuing boom in public investment." Turkey had already slowed in 2012 as a result of weaker domestic demand but was expected to see a re-acceleration this year. The EBRD was also noticeably gloomier about the outlook for the four countries in north Africa where it has recently started lending, although on a small scale. In Egypt and Tunisia, "volatile political and security conditions" were weighing on investor confidence. Morocco and Jordan were being buffeted by deteriorating external conditions and high commodity prices, it added. In Slovenia, where the government is battling to avoid its weakened bank sector forcing an international bailout, the recession was expected to continue this year with gross domestic product contracting a further 2.5 per cent. A contraction of 0.9 per cent was forecast for 2014. Mr Berglof said the policy argument about fiscal austerity versus economic growth stimulus plans was not the most important issue for the EBRD region. Fiscal responsibility is of course important. But most of our countries have already made significant progress in this area during the crisis. What is urgently important now is to advance structural reforms.