Analytics, Economics, EU – Baltic States, Financial Services, GDP

The IMF expects the region to grow 2.7% this year, a downward revision of 0.1 percentage points from its July estimate, before expanding by 2.9% in 2015.

"Prospects remain uneven in emerging and developing Europe, with strong growth and improving employment in Hungary and Poland, but continued weakness in southeastern Europe," the IMF said in its latest World Economic Outlook report. "A return of market turbulence and a weaker euro area recovery continue to be the main risks to the outlook" of the region.

The IMF's "emerging and developing Europe" category refers to seven European Union members –- Bulgaria, Croatia, Hungary, Latvia, Lithuania, Poland and Romania –- plus non-members Serbia and Turkey.

Nearby Czech Republic and eurozone members Estonia, Slovakia and Slovenia are considered part of "advanced Europe".

The economies of Hungary and Poland, central Europe's heavyweight, are projected to grow by 2.8% and 3.2% this year. Growth will slow to 2.3% in 2015 in Hungary but pick up to 3.3% in Poland.

Turkey's growth is expected to slow to three% in 2014 and 2015, down from four% in 2013.

The Balkan countries, which were hit by severe flooding in May, will also see their growth slow this year "before picking up in 2015 on reconstruction spending, rebuilding of flood-damaged areas, and in some countries, employment growth".

Two of the region's countries, Croatia and Serbia, are expected to remain in recession this year.

Croatia's economy is forecast to contract by 0.8% this year and post 0.5% growth in 2015. Serbia should see a 0.5% contraction before rebounding by 1.0% in 2015.

The Czech Republic logged a 0.9-percent contraction last year after emerging from a record-long 18-month recession but the IMF expects its economy to expand by 2.5% both this year and next.

The neighburing Slovak economy is meanwhile expected to expand by 2.4% and 2.7% this year and next.

Growth should remain relatively strong this year in the three Baltic states, with forecasts of 3% in Lithuania, 2.7% in Latvia and 1.2% in Estonia. Their respective economies are expected to expand by 3.3%, 3.2% and 2.5% next year, when they will all be eurozone members.

"With downside risks remaining, monetary and exchange rate policies should be used to support demand and manage the risks from market volatility," the IMF said. "Enhancing debt resolution frameworks and advancing labor market reforms remain priorities for most countries in the region."