WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

Continued weak external demand and uncertain recovery of investments will allow for onlymodest growth prospects for the countries of Central, East and Southeast Europe (CESEE)this year. Slovenia, Croatia and the Czech Republic will remain in recession. Russia, Ukraineand the Baltic countries will experience a slowdown of growth. Over the next two years,growth will speed up, but will remain below potential for most CESEE countries exceptKazakhstan and likely Turkey. The emerging institutional and policy framework in the EU thatreflects unresolved dilemmas about the process of deepening may put in question the modelof convergence growth. Widening of the EU is, in contrast, proceeding with Croatia accedingand the intention to start negotiations with Serbia being announced. However, given theworsening labour markets, social and political risks may be on the rise. These are the mainresults of the newly released medium-term growth forecast for the region by the ViennaInstitute for International Economic Studies (wiiw).