Reforms supported by investments in green and digital infrastructure and human capital can boost, and even double, the growth potential in some EU member states between now and 2030, including to 3.5 percent in Croatia, the World Bank said in its latest report.

The latest EU Regular Economic Report reviews how some EU member states can navigate turbulent economic times to foster long-term growth and inclusion following the pandemic, an ongoing conflict in the region, and the cost of living crisis.

Many EU member state economies have recovered to pre-pandemic levels of growth, although at an uneven pace. After contracting by 5.9 percent in 2020, EU27 economic growth surged to 5.3 percent in 2021, its strongest post-recession recovery to date.

This was largely driven by a relaxation of COVID-19 restrictions that has since bolstered demand, while unprecedented policy support, increased adaptation, and high vaccination uptake supported recovery.

The report recommends that governments build on this encouraging return to growth. In this context, reforms supported by the EU member states’ National Recovery and Resilience Plans provide a good starting point for countries to address constraints.

The report finds that in the long term, higher investment along with reforms, such as increasing labour force participation, integrating migrant workers, strengthening institutions, and improving educational outcomes can raise potential output.

If these reforms are implemented, potential growth through the end of this decade (2022-30) in Poland and Romania could significantly outperform the previous decade, while Bulgaria and Croatia could see growth double from the current baseline scenario.

These reforms could propel average potential growth during 2022-30 to 4.6 percent in Bulgaria, 3.5 percent in Croatia, 4 percent in Poland, and 5.2 percent in Romania.

Undertaking ambitious reform agendas would set these EU member states on the path to stronger convergence with the EU average per capita income levels and offset adverse impacts from the pandemic and war.