Transition Report 2023-24

Average satisfaction with life has risen further relative to 2016 across the EBRD regions. That increase probably reflects rising incomes, favourable developments in labour markets (including a shift towards more pleasant and higher-skilled jobs) and improvements in health. Notably, people’s assessments of their own health have improved significantly over time, with such assessments including not only physical aspects, but also mental health. Survey results show that mental distress is associated with lower satisfaction and tends to be more prevalent in poorer countries and among individuals who are financially insecure.

A successful transition to a green economy – which will require a rapid roll-out of clean technologies – will depend on the availability of various critical raw materials. Currently, China dominates the production and processing of many of these materials, so manufacturers around the world are trying to diversify their supplier bases. This diversification will take time and require significant investment, but it may benefit several economies in the EBRD regions. There are clear opportunities, for example, when it comes to supplying materials for the solar power and fuel cell sectors.

People living in the EBRD regions tend to be aware of climate change and its consequences. However, that does not necessarily translate into a willingness to pay higher taxes or forgo economic growth and job creation in order to prioritise environmental policies. Economic history emphasises the importance of labour market adjustments during major economic transformations, offering insights for the transition to a green economy. Despite increasing demand for green skills, labour market adaptation remains sluggish across the EBRD regions, partly reflecting the slow pace of green innovation. In order to maintain public backing for climate action, it is vital to ensure a just transition process and address the economic concerns of vulnerable groups.

Housing policies have lasting effects. For instance, post-war housing blocks continue to shape cityscapes across much of the EBRD regions. Levels of home ownership remain high across all income groups, but there is limited new construction and little social housing. Meanwhile, inequality in the condition of housing is pronounced, as is spatial segregation (the existence of low-income neighbourhoods separate from higher-income areas). Housing also has a substantial environmental footprint: residential emissions per unit of energy used are higher in the EBRD regions than in advanced European comparators, partly reflecting continued reliance on coal. However, there is scope for significant emission reductions through improvements in insulation and metering, even taking the building stock as given.

This chapter presents the latest assessment of transition challenges in the EBRD regions, looking at whether economies are competitive, well governed, green, inclusive, resilient and integrated. Over the last year, scores in the areas of inclusion and integration have increased substantially on the back of previous reforms, while scores for governance have declined. Across all areas, improvements have been concentrated mainly in central Europe, the Baltic states and south-eastern Europe, while declines have mostly been observed in the southern and eastern Mediterranean region, and eastern Europe and the Caucasus.

Country assessments – which are only available online – provide a comprehensive overview of macroeconomic developments, policy responses and structural reforms in individual economies over the past year, as well as identifying key priorities for 2025.