Overshadowed by War and Sanctions


Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Artem Kochnev, Niko Korpar, Sebastian Leitner, Isilda Mara, Bernhard Moshammer, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Nina Vujanović, Zuzana Zavarská and Adam Żurawski

wiiw Forecast Report No. Spring 2022, April 2022
151 pages including 32 Tables, and 46 Figures

The current report is only available to members and paying customers. Past issues become freely available online when the next report is released. Several individual sections of the report are freely available to download now (see below).

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Executive summary
by Vasily Astrov
free download

Indicators 2020-2021 and Outlook 2022-2024 - Baseline Scenario
Premium Members only
Summary of key recent macroeconomic data for CESEE, and overview of new wiiw forecasts for 2022-2024 (Excel file)

1. Global overview: Inflation up, growth down
by Richard Grieveson, Branimir Jovanović and Artem Kochnev
Russia’s invasion of Ukraine will have substantial negative impacts for the global economy. The euro area will be affected primarily via a spike in inflation that will eat into real incomes, but also by a hit to confidence, which will weigh heavily on investment. In our baseline scenario, we project growth in the euro area of only 2.5% this year (1.7 percentage points lower than we were anticipating in Winter) and inflation of 6% (2.8 percentage points higher). In the adverse scenario, real GDP will decline by 0.9% and inflation will reach 9.5%.

2. CESEE Overview: Overshadowed by war and sanctions
by Vasily Astrov, Sebastian Leitner and Bernhard Moshammer
The war in Ukraine and Russia sanctions will affect the entire CESEE region, primarily on account of the rising prices of food and energy eating into real incomes as well as trade disruptions. In the baseline scenario, recessions this year will be confined to Ukraine and the bulk of the CIS; elsewhere in CESEE, the growth forecasts have been revised downwards by 1-2 percentage points compared to Winter. In the adverse scenario, half of the CESEE region will slide into recession, while inflation will soar into the double-digit range nearly everywhere. The influx of Ukrainian refugees will partly alleviate labour shortages throughout the region but will also require increased social spending.

3. Convergence Monitor
by Richard Grieveson

You can also buy separate country reports of this report

1ALBANIA: Price hikes and energy supply issues will hamper growthIsilda Mara Details & Buy
2BELARUS: Forced into a Russian orbitRumen Dobrinsky Details & Buy
3BOSNIA AND HERZEGOVINA: Local political tensions leave the country in limboSelena Duraković Details & Buy
4BULGARIA: A weak government struggles with mounting challengesRumen Dobrinsky Details & Buy
5CROATIA: War taking its toll on economic growthBernd Christoph Ströhm Details & Buy
6CZECHIA: Mounting challenges depress otherwise solid growth prospectsZuzana Zavarská Details & Buy
7ESTONIA: Heading into the unknownMaryna Tverdostup Details & Buy
8HUNGARY: The party is overSandor Richter Details & Buy
9KAZAKHSTAN: Challenges aheadAlexandra Bykova Details & Buy
10KOSOVO: Positive and negative spill-over effects expected as international trade adjustsIsilda Mara Details & Buy
11LATVIA: Government ready to bear the high cost of cutting economic ties with RussiaSebastian Leitner Details & Buy
12LITHUANIA: At the frontline of economic sanctionsSebastian Leitner Details & Buy
13MOLDOVA: From boom to bustGabor Hunya Details & Buy
14MONTENEGRO: Mired in uncertaintyNina Vujanović Details & Buy
15NORTH MACEDONIA: Too fragile for so many shocksBranimir Jovanović Details & Buy
16POLAND: The fight against inflation set to cause collateral damageAdam Żurawski Details & Buy
17ROMANIA: On the bumpy road to readjustmentGabor Hunya Details & Buy
18RUSSIA: Entering the deepest crisis since the early ninetiesVasily Astrov Details & Buy
19SERBIA: Walking a tightropeBranimir Jovanović Details & Buy
20SLOVAKIA: Yet another blow to the automotive industryDoris Hanzl-Weiss Details & Buy
21SLOVENIA: Encouraging economic performance tempered by concerns over inflationNiko Korpar Details & Buy
22TURKEY: Back to the eye of the stormRichard Grieveson Details & Buy
23UKRAINE: Losses from the war are mountingOlga Pindyuk Details & Buy

Our Spring 2022 Forecast comes at a time of pronounced global uncertainty, arising from Russia’s invasion of Ukraine and wide-ranging Western sanctions on Russia. To take account of this, we distinguish between two extreme scenarios. In the baseline scenario, which assumes no further major Western sanctions and some kind of a ceasefire by the middle of 2022, recessions this year will be confined to Ukraine and the bulk of the CIS; elsewhere in CESEE, growth forecasts have been revised downwards by 1-2 percentage points compared to Winter. However, in the adverse scenario, which assumes a further war escalation and an immediate EU embargo on Russian energy, half of the CESEE region will slide into recession, while inflation will soar into the double-digit range nearly everywhere.


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

Keywords: CESEE, economic forecast, Central and Eastern Europe, Western Balkans, EU, euro area, CIS, Ukraine, Turkey, convergence, business cycle, coronavirus, labour markets, unemployment, Russia-Ukraine war, Russia sanctions, commodity prices, price controls, trade disruptions, Ukrainian refugees, energy embargo, monetary policy, fiscal policy, impact on Austria

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, Central and East Europe, CESEE, CIS, Croatia, Czechia, Estonia, Euro Area, European Union, Hungary, Kazakhstan, Kosovo, Latvia, Lithuania, Moldova, Montenegro, North Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Southeast Europe, Turkey, Ukraine, US, Western Balkans, Austria

Research Areas: Macroeconomic Analysis and Policy, International Trade, Competitiveness and FDI

ISBN-13: 978-3-85209-075-7