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Eastern Europe to grow by 5.4% this year, more than expected

WIIW, region will perform better than the Eurozone

20 October, 13:55
(ANSA) - BELGRADE, OCT 20 - Economies in Central, Eastern and Southeastern Europe will grow by 5.4% in 2021, more than previously expected, according to the new forecasts of the Vienna Institute for International Economic Studies (WIIW), made public today. This represents an upward revision of 1.2 percentage points compared to the summer and the region is "likely to grow significantly faster than the euro area (4.8%)," WIIW said. The pre-crisis levels of 2019 were generally already exceeded in the second quarter of this year, the WIIW report reads. However, recovery in the region is expected to lose some momentum in 2022 (3.7%) and 2023 (3.5%), WIIW forecasted.

According to the Vienna-based institute, among EU member countries in Central and Eastern Europe Bulgaria will record in 2021 an economic growth of 3.5%, the Czech Republic 3.4%, Estonia 7.8%, Croatia 7.2%, Hungary 6.2%, Lithuania 4.4%, Latvia 4.5%, Poland 5.3%, Romania 6.8%, Slovenia 5.2% and Slovakia 4.0%. In the Western Balkans, Albania will record a 6.4% growth in 2021, Bosnia and Herzegovina 3.7%, Montenegro 8.4%, North Macedonia 3.5%, Serbia 6.6% and Kosovo 6.0%.

"The strong performance of the Eastern European economies is mainly explained by the less strict COVID rules in many places, and by the fact that the service sector is much smaller than in Western Europe', says WIIW senior economist Vasily Astrov.

According to the report, the main driver of growth in the region remains private consumption, followed by investments, with exports also picking up, while tourism recovered during the summer months. Employment is approaching pre-crisis levels in many countries in the region, in particular in Croatia, Latvia, Hungary, Poland and Slovenia the institute noted, adding that "there are labour shortages in those sectors that have expanded in the wake of the crisis. This is the case not only in the EU member states of the region, but also in Montenegro, Serbia and Russia." Rising inflation is also felt in the region, WIIW said, forecasting however that this "should be a transitory phenomenon." (ANSA).

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