ASIATODAY.ID, WASHINGTON — The World Bank has issued a stark warning: countries across Europe and Central Asia (ECA) will struggle to regain economic momentum unless they urgently boost productivity.
A new report, TIDES of Change: Igniting Productivity Growth in Europe and Central Asia, reveals that simply adding more capital and workers no longer drives sustainable growth. What matters most now is how efficiently economies use their resources.
According to the report, a 10% increase in productivity could create nearly 2 million new jobs across the region—underscoring productivity’s central role in driving employment, competitiveness, and long-term prosperity.
Productivity Slowdown at the Heart of Weak Growth
The report finds that the region’s post–global financial crisis slowdown was driven largely by weakening productivity growth. Sluggish reforms, persistent market distortions, and the dominance of inefficient state-owned enterprises have hindered the region’s ability to allocate resources where they generate the highest returns.
Without meaningful productivity gains, additional capital investment delivers diminishing output, ultimately reducing the quality and sustainability of growth.
The World Bank estimates that if post-2008 productivity growth had matched pre-crisis levels, the region’s GDP today could be roughly 62% higher.
Underperforming Trade, Missed Opportunities
Exporting firms in ECA are the most productive and dynamic, yet they represent only a small share of the private sector. They contribute disproportionately to jobs, investment, and value added. Still, countries in the region trade 45% less than their potential, signaling vast untapped opportunities.
This underperformance is especially critical now, as global multinational companies shift toward more resilient, near-shore supply chains. To seize this opportunity, ECA countries must accelerate business environment reforms and strengthen domestic firms so they can integrate into high-value global value chains.
The TIDES Reform Framework: A Pathway to Renewal
The report calls for renewed reform momentum across five strategic pillars encapsulated in TIDES: Trade, Investment, Digitalization, Efficiency, and Skills.
“The evidence is compelling,” said Asad Alam, Regional Director for Europe and Central Asia, Prosperity at the World Bank on Monday, November 24, 2025.
“When competition is strong, when firms can access technology and finance, when trade and investment flows are open, and when workers are equipped with adaptive skills, productivity rises. Firms expand, hire more workers, and fuel national income growth.”
Big Data Reveals Deep Productivity Bottlenecks
The TIDES of Change report draws on more than 40 million firm-level observations from national statistical and tax authorities across 16 countries between 2008 and 2023.
The dataset offers unprecedented insight into the drivers of productivity stagnation—including weak innovation, incomplete global integration, and insufficient digital adoption.
The World Bank urges governments to mainstream the productivity agenda into national policies, enforce market competition, ensure transparency in public procurement, and monitor reform progress rigorously.
With strong policies and sustained political commitment, ECA countries can reverse the slowdown, boost competitiveness, and shape a more resilient economic future. (AT Network)
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