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

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Richard Grieveson, Doris Hanzl-Weiss, Philipp Heimberger, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Leon Podkaminer, Sandor Richter and Bernd Christoph Ströhm

wiiw Forecast Report No. Autumn 2020, November 2020
151 pages including 37 Tables, 46 Figures and 1 Box

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EXECUTIVE SUMMARY
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1. Global overview: A long and bumpy road back to normality
by Richard Grieveson
A renewed spread of the pandemic will lead to increased restrictions on economic life over the winter, but by the end of Q1 2021 restrictions should again be lifted, allowing economy activity to rise. Major players will continue to engage in ultra-loose fiscal and monetary policy, providing an important source of stability and demand. The economic recovery will be bumpy, with a general upward trend punctuated by period of weakness. Risks to global projections remain unusually high in both directions.
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2. CESEE Overview
by Vasily Astrov, Philipp Heimberger and Sebastian Leitner
The recovery of CESEE economies in 2021-2022 will be sluggish and will depend on success in containing the pandemic without resort to lengthy lockdowns, as well as on the continuation of government support measures.
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3.1 Convergence Monitor
by Alexandra Bykova
In 2019, the convergence process continued in almost all CESEE economies, except Turkey, Russia and Belarus; the Czech Republic and Slovenia remained top performers.
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3.2 Business cycle monitor: Widening of budget deficits cushions economic downturn
by Alexandra Bykova
Despite the negative economic fallout from the pandemic, the business cycle index continues to suggest a more positive picture than after the 2009 global financial crisis. The domestic finance sub-component was positive for 14 countries in CESEE in Q2 2020, reflecting a strongly counter-cyclical fiscal response to the downturn across large parts of the region.
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3.3 Credit monitor
by Olga Pindyuk
Credit growth slowed in large parts of the region during 2020, but the lending boom continued in Turkey.
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3.4 FDI monitor
by Olga Pindyuk
The most recent data show a rise in FDI inflows into CESEE, but the pandemic and its fallout could alter this trend in the coming years.
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