Growth in Emerging Europe decelerated markedly to 2.6% in 2012, from 4.6% in 2011. Economies across Emerging Europe with strong economic and financial linkages to countries in the Eurozone - the region’s main market for exports –suffered the most from declining export demand, reduced capital and remittance flows, banking sector de-leveraging, and weakening domestic demand. In contrast, growth remained relatively robust in most resource-rich economies, supported by still high prices for key commodities.

Emerging Europe has made important progress towards the MDGs: the proportion of poor has been halved since 1990, the target on access to water has been reached, and the region is on track to achieve universal primary education and gender equality. Nevertheless, rising unemployment as a result of the Eurozone crisis has had a strong negative impact on household and public budgets and on the achievement of other MDGs. Much remains to be done to overcome maternal mortality and limited access to safe drinking water and proper sanitation, particularly in the poorest countries of the region.

OFID is actively helping Emerging Europe achieve its development goals and aspirations, based on the needs and priorities of its partner countries. During 2012, one country, Bosnia and Herzegovina, benefited from OFID financing in the form of a US$100,000 grant to the health sector. Over the years, OFID has expanded its partnership to seven countries in the region.