Monthly Report No. 7-8/2021

Light at the End of the Tunnel?

Economic Forecasts for Eastern Europe for 2021-23

CESEE’s economic results from Q1 2021 were better than expected, despite a severe wave of the pandemic. This suggests that the economies are learning to live with COVID-19. The pandemic is far from over, and a new wave is likely to strike in autumn, but we do not expect it to wreak such economic damage as the previous waves. We are thus upgrading our GDP growth forecasts for 2021 for 20 of the 23 CESEE economies, and expect the region as a whole to grow by 4.2% on a weighted average basis, more than compensating for the setback of last year. Inflation is back, caused primarily by higher global energy and food prices. Although we regard it as largely transitory, six CESEE countries have already tightened their monetary policy in response, and several more are likely to follow suit.

Regional Overview by Branimir Jovanovic 

Country updates:

  • Albania: Public investment and tourism will boost growth further by Isilda Mara
  • Belarus: Further reorientation towards Russia by Rumen Dobrinsky
  • Bosnia and Herzegovina: Recovery under way, but concern over sluggish vaccination campaign by Selena Duraković
  • Bulgaria: Recovery amidst political uncertainty by Rumen Dobrinsky
  • Croatia: Economic rebound in sight by Bernd Christoph Ströhm
  • Czechia: Recovery delayed by Leon Podkaminer
  • Estonia: Sprinting to recovery by Maryna Tverdostup
  • Hungary: Change in monetary policy with rising inflation by Sándor Richter
  • Kazakhstan: Recovery gains momentum, but could falter in the event of pandemic resurgence by Alexandra Bykova
  • Kosovo: Outlook for growth improves, with robust domestic and external demand by Isilda Mara
  • Latvia: Public finances providing strong support for the recovery by Sebastian Leitner
  • Lithuania: Strong revival in growth following last year’s mild recession by Sebastian Leitner
  • Moldova: Rapid recovery and the chance to find an anchor with the EU by Gábor Hunya
  • Montenegro: Struggling to recover properly from last year’s crash by Bernd Christoph Ströhm
  • North Macedonia: Government fails to support the economy, yet again by Branimir Jovanović
  • Poland: Recovery under way by Leon Podkaminer
  • Romania: Rapid post-COVID recovery amid large imbalances by Gábor Hunya
  • Russia: Delta variant looming over economic recovery by Vasily Astrov
  • Serbia: Continuing to impress by Branimir Jovanović
  • Slovakia: Shortage of computer chips could dampen prospects by Doris Hanzl-Weiss
  • Slovenia: The upcoming presidency of the EU Council places internal politics in the spotlight by Niko Korpar
  • Turkey: Performing well again in 2021 by Richard Grieveson
  • Ukraine: Recovery driven by a spending spree by Olga Pindyuk


Reference to wiiw databases: wiiw Annual Database, wiiw Monthly Database

Keywords: CESEE, economic forecast, Central and Eastern Europe, Southeast Europe, Western Balkans, EU, euro area, CIS, coronavirus, COVID-19, pandemic, restrictions, lockdowns, Stringency Index, EU Recovery and Resilience Facility, private consumption, public consumption, credit, investment, exports, FDI, labour markets, unemployment, inflation, exchange rates, monetary policy, fiscal policy, near-shoring

JEL classification: E20, E21, E22, E24, E32, E5, E62, F21, F31, H60, I18, J20, J30, O47, O52, O57, P24, P27, P33, P52

Countries covered: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, CESEE, Croatia, Czechia, Estonia, European Union, Hungary, Kazakhstan, Kosovo, Latvia, Lithuania, Moldova, Montenegro, New EU Member States, North Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine, EU-CEE, SEE, CIS

Research Areas: Macroeconomic Analysis and Policy