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

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

Executive summary
by Vasily Astrov
free download

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