According to the latest Regional Economic Prospects – the bank's quarterly economic assessment - growth in the transition region is expected to drop from 4.6% in 2011 to 2.7% in 2012 before picking up modestly to 3.2% in 2013. The forecast is the same as in the bank's July report.

The crisis in the Eurozone is continuing to negatively affect economic performance in the EBRD's region of operations. However, thanks to the recent actions by the European Central Bank as well as announced European measures toward bank resolution and banking union the downside risks to growth have reduced somewhat, the bank said.

The EBRD's region of operations fared worse in the first half of 2012 compared to the second half of 2011, with central Europe, the Baltics and south-eastern Europe noticeably slower.

That is why EBRD economists revised down their forecasts, including those for Slovenia, Hungary, Serbia and Croatia, all of which are still in recession.

According to the latest projections, Croatia's economy is expected to fall 1.9% this year, while in July the EBRD projected a decline of 1.2%. In 2013, the country's GDP is expected to grow 1.2%, compared to the previous growth projection of 1.5%.

"In Croatia, the economic situation remains very difficult. GDP declined by 1.3 and 2.1 per cent y-o-y in Q1 and Q2 respectively on the back of falling external demand and weak domestic demand, and overall growth for 2012 seems certain to be negative, reflecting the overall lack of competitiveness in the economy. However, Croatia will join the EU on July 01 2013, and this should help to revive confidence and investment," the report said.

Slovenia's economy is expected to contract by 2.5% this year and by 2% in 2013. The Hungarian economy is likely to drop 1.5% this year, but its fall should stop next year. Serbia's GDP is predicted to shrink 0.7% this year and grow 1.1% in 2013.