Signs of stabilisation in the eurozone were reducing the risks facing emerging Europe and leading to cautious optimism that the worst of the region’s problems may be over, the European Bank for Construction and Development (EBRD) said in a report on Monday.

The bank’s most recent economic outlook indicated a decline in downside risks following a sharp slowdown in economic activity in 2012, with the expectation of a moderate acceleration in growth this year.

“Growth in the transition region continued to slow down in the third quarter of 2012, but the deceleration is showing signs of bottoming out,” said the report.

Across the entire transition region, the bank expected growth of 3.1% in 2013, following a sharp slowdown to 2.6% in 2012 from 4.6% in 2011.

While the 2013 forecast was marginally lower than the 3.2% seen in October and indicated that it was still too early to sound the “all-clear”, EBRD chief economist Erik Berglof confirmed that there were sings of stabilisation.

“For the first time in a long while, we are seeing the possibility of a reduction in the risks facing emerging Europe, especially the risks from the eurozone,” he said.

Declines in exports in the latter part of 2012 moderated compared with levels seen earlier in the year, while modest private capital flows into the region that had returned in the second quarter, continued in the third quarter.

Moreover, cross-border bank deleveraging in the region, particularly in Central, Southern and Eastern Europe and the Baltics continued at a slower pace than earlier.

However, these developments had not yet translated into a consistent improvement in credit growth in the region, the report said.

The EBRD added that policy decisions taken in the eurozone in recent months increased the chances of an economic improvement in the single currency bloc, albeit a gradual one.

These resolutions included the European Central Bank signalling its readiness to aid countries under pressure on the sovereign debt markets, as well as moves to create a European Banking Union.

“The euro area crisis will continue to negatively impact growth in the transition region, but as the eurozone recession bottoms out, economic activity in the transition countries that depends on it is likely to stop deteriorating,” the report said.