Recovery Beating Expectations

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

wiiw Forecast Report No. Autumn 2021, October 2021
139 pages including 30 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

OVERVIEW 2019-2020 AND OUTLOOK 2021-2023
Premium Members only
Summary of key recent macroeconomic data for CESEE, and overview of new wiiw forecasts for 2021-2023 (Excel file)

1. Global overview: Hitting the limits
by Richard Grieveson
We have further revised upward our forecasts since the last update, reflecting stronger-than-expected activity during the middle of the year. However, while global momentum remains robust, at least in the US and China the current cycle appears to have peaked. Growth is coming up against increasing supply-side constraint, including increase input costs, longer waiting times, and labour shortages. Although these challenges appear manageable for now, the risks to the forecast are primarily on the downside, with the possibility of a more prolonged bout of high inflation a particular concern.

2. CESEE Overview: Recovery beating expectations
by Vasily Astrov and Sebastian Leitner
The economic recovery in CESEE has strengthened further in recent months, resulting in a number of additional upgrades to our growth forecasts for 2021, to 5.4% on the regional average. This good performance has been built on two important foundation stones: the adaptation of the CESEE economies to the pandemic and the increasing reluctance of their governments to impose restrictions. However, the pace of recovery is projected to slow to 3.7% next year and 3.5% in 2023. The risks to this forecast are mostly on the downside, and include particularly unfavourable COVID-19 developments, premature fiscal consolidation, and the upcoming monetary tapering in the US.

3.1 CESEE monitors
by Alexandra Bykova
The wiiw Business Cycle Index indicates that most economies in CESEE have regained their pre-pandemic levels of output. The visible underperformance in GDP relative to the long-term average, which was identified in the Spring, has vanished. Nevertheless, despite the economic revival and the recent rise in inflation, there have been generally few signs of overheating yet.

You can also buy separate country reports of this report

No.TitleAuthor 
1ALBANIA: V-shaped and vibrant recovery of the economyIsilda Mara Details & Buy
2BELARUS: Muddling through amidst sanctionsRumen Dobrinsky Details & Buy
3BOSNIA AND HERZEGOVINA: Recovery transcends 2020 lossesSelena Duraković Details & Buy
4BULGARIA: Moderate recovery continues, despite the political stalemateRumen Dobrinsky Details & Buy
5CROATIA: Back on trackBernd Christoph Ströhm Details & Buy
6CZECHIA: Turnaround subdued by central bank activityLeon Podkaminer Details & Buy
7ESTONIA: Full-speed growth riding on massive investmentMaryna Tverdostup Details & Buy
8HUNGARY: Tipping from recession to overheatingSandor Richter Details & Buy
9KAZAKHSTAN: Full recovery in sightAlexandra Bykova Details & Buy
10KOSOVO: Strong growth momentum and reciprocity with SerbiaIsilda Mara Details & Buy
11LATVIA: Faster recovery than expected, driven by release of pent up demandSebastian Leitner Details & Buy
12LITHUANIA: After the storm, the prospects are brightSebastian Leitner Details & Buy
13MOLDOVA: Reorientation towards the WestGabor Hunya Details & Buy
14MONTENEGRO: Tourism pushes GDP upSelena Duraković Details & Buy
15NORTH MACEDONIA: COVID-19 lethargyBranimir Jovanović Details & Buy
16POLAND: Prospects reasonably good, but extraordinarily uncertainLeon Podkaminer Details & Buy
17ROMANIA: Recovery shaken by triple crisisGabor Hunya Details & Buy
18RUSSIA: Back to ‘twin surpluses’Vasily Astrov Details & Buy
19SERBIA: The good results continue, but a trinity of headwinds is loomingBranimir Jovanović Details & Buy
20SLOVAKIA: Shortage of semiconductors starting to biteDoris Hanzl-Weiss Details & Buy
21SLOVENIA: Racing towards full economic recovery while combating vaccine hesitancyNiko Korpar Details & Buy
22TURKEY: Outperforming the region – for nowRichard Grieveson Details & Buy
23UKRAINE: Underwhelming recovery against background of mounting risksOlga Pindyuk Details & Buy

The economic recovery in CESEE has strengthened further in recent months, resulting in a number of additional upgrades to our growth forecasts for 2021, to 5.4% on the regional average. This good performance has been built on two important foundation stones: the adaptation of the CESEE economies to the pandemic and the increasing reluctance of their governments to impose restrictions. Labour markets have recovered, too; labour shortages have been on the rise, albeit, paradoxically, underemployment is still an issue. Despite the recent rise in inflation, driven mostly by supply-side disruptions and energy prices, there have been so far few signs of overheating in the region. The pace of recovery is projected to slow to 3.7% next year and 3.5% in 2023. The risks to this forecast are mostly on the downside, and include particularly unfavourable COVID-19 developments, premature fiscal consolidation, and the upcoming monetary tapering in the US.

 

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

Keywords: CESEE, economic forecast, Central and Eastern Europe, Western Balkans, EU, euro area, CIS, Turkey, US, convergence, business cycle, coronavirus, coronavirus restrictions, coronavirus vaccination, Recovery and Resilience Facility, private consumption, credit, investment, exports, labour markets, unemployment, short-time work schemes, monetary policy, fiscal policy

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

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

ISBN-13: 978-3-85209-074-0


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