The five European economies set to grow more than twice as fast as the eurozone
The IMF expects the eurozone to grow by little more than 1% a year through 2031. Yet some of Europe's fastest growth is forecast in smaller economies, with war-hit Ukraine among the countries expected to outpace the eurozone by more than two to one.
Europe faces years of sluggish economic growth.
High public debt, ageing populations, weak productivity, lingering energy costs and persistent geopolitical uncertainty are expected to keep growth well below historical norms for the rest of the decade.
According to the International Monetary Fund's most recent World Economic Outlook, the eurozone is projected to expand by just 1.2% a year on average between 2027 and 2031, with its strongest year, 2028, reaching only 1.4%.
The wider European Union does slightly better at 1.4% a year, again peaking in 2028 at 1.6%.
That is a modest picture by any measure. Global output is forecast to grow by around 3.2% a year over the same period. Emerging and developing Asia is set to expand by 4.6% annually and India by 6.5%, while even sub-Saharan Africa is on track to grow by 4.6%.
Yet a group of much smaller European nations, stretching from the Mediterranean to the Western Balkans and Eastern Europe, is projected to expand at more than double the pace of the eurozone over the next five years.
5. Moldova: Reforms and EU integration underpin growth
Moldova is forecast to grow by 3.5% a year on average between 2027 and 2031, with its strongest year being 2028 at around 3.7%. The recovery follows a brutal run of shocks: war on its border, an energy squeeze and a drought that left growth close to zero in 2024.
The turnaround rests on EU money and reform. Brussels granted Moldova candidate status in 2022 and opened accession talks in 2024, and the EU Growth Plan is now funnelling funds into public investment.
Household consumption, buoyed by rising real wages and remittances worth around a tenth of GDP, accounts for much of the remainder of growth, while IT and other services lead on the supply side.
The IMF, concluding its 2025 Article IV review in February, said the recovery was "supported by a good harvest, strong domestic demand, and substantial EU financing."
The Fund believes maintaining reform momentum will be crucial.
The Fund's own caveat is blunt: the biggest risks are the war in Ukraine and any slippage in EU-linked reforms.
4. Serbia: Investment boom keeps momentum alive
Serbia edges just ahead of Moldova with an average annual growth rate of 3.52%, and unusually its momentum builds later in the window, peaking around 2030–31.
The near-term story, though, is dominated by a single date.
Next year, Belgrade will host Expo 2027, a world fair expected to attract millions of visitors.
The event is driving a construction and infrastructure supercycle — highways, railways, and urban redevelopment — on top of an expanding manufacturing export base and heavy Chinese-backed investment in copper mining. Public investment, not consumption, is the primary engine here.
The IMF says Serbia has built important macroeconomic buffers after successfully reducing inflation while maintaining fiscal discipline.
The risks are political tensions before the 2027 elections, and ensuring that rapid public investment translates into lasting productivity gains.
3. Ukraine: Reconstruction becomes the growth engine
The IMF is pencilling in average annual growth of 3.8% for Ukraine and a standout year in 2028 at around 4.2%.
The projection is a reconstruction story. It assumes, as the IMF's baseline does, that the war winds down and rebuilding begins in earnest, unleashing a wave of fixed investment against a rebuilding estimate that the World Bank now puts at near $600 billion.
Strip out that assumption, and the picture darkens sharply: the Fund's downside scenario, with fighting grinding on, sees growth of just 1% in 2027.
"The outlook remains exceptionally uncertain as the war continues to take a heavy toll on the population and economy," the IMF said in its latest Article IV assessment.
2. Kosovo: Domestic demand remains remarkably resilient
Kosovo is projected to remain one of Europe's fastest-growing economies despite its relatively small size.
Growth is expected to converge towards around 4%, supported by strong household consumption, public investment, diaspora inflows and a young labour force.
"Timely implementation of the EU New Growth Plan could provide an additional boost to growth and employment," the Fund stated in its latest Article IV report on Kosovo.
The drivers of growth are distinctive. Money sent home by a large diaspora, chiefly in Germany and Switzerland, funds both consumption and business investment, while public infrastructure spending and a deepening banking sector add to the mix.
The weakness is the flip side of the same coin: growth is demand-led and import-heavy, and the country has yet to build a competitive export base.
1. Malta: Europe's fastest-growing economy
Malta tops the IMF's medium-term European growth rankings. The IMF expects the economy to grow by nearly 4% a year over the next five years.
Over the past decade, the island has grown at nearly 7% a year on the back of tourism, online gaming and professional and financial services, drawing in foreign workers to staff a booming economy.
That model is now maturing. With unemployment near record lows and labour shortages intensifying, Malta can no longer rely solely on rapid workforce growth.
As the IMF noted, "The influx of foreign workers that fueled economic activity in the past has also strained infrastructure and public services, highlighting the limits of the current labour-intensive growth model."
The next phase of Malta's economic success will depend less on labour expansion and more on productivity gains.
According to the IMF, strengthening public finances while increasing investment in infrastructure, education and innovation will be critical to raising the economy's long-term growth potential.
