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March 16, 2018 www.intellinews.com I Page 9
Strong growth but a risky outlook for
Central and Eastern Europe
All economies in the Central, Southeast and Eastern Europe region (CESEE) experienced positive growth last year, for the first time
in a decade, as they benefitted from global growth. This trend is set to continue, as major international economies, specifically the Eurozone, China and the US, are simultaneously expanding for the first time since 2010, says
a new report from the Vienna Institute for International Economic Studies (wiiw). “The coordinated global upswing has further to run, and we expect CESEE economies to continue to benefit in the coming years,” writes the institute.
“The global economy is in a sweet spot. This will continue to provide a big boost to economic activ- ity across the CESEE region in the coming years,” commented wiiw economist Richard Grieveson. “After several false starts, a real recovery is under way across Europe, including in most of CESEE.
It is not an overstatement to say that some coun- tries in the region are experiencing a boom.”
During a webinar on March 13, economists talked of the region being at a “very strong phase of the cycle” at the moment, as reflected in 2017 growth figures being better than expected, while wiiw has
Clare Nuttall in Bucharest
revised upwards its projections for most of the region. The positive trend is expected to continue this year, though will probably peak soon, to be followed by some tailing off in 2019 and 2020.
On the other hand, viiw warns of significant downside risks to regional growth. Its economists challenge assumptions that risks are low, listing a range of risks at both global and regional level.
“Our biggest concerns are a potential trade war and that global central banks do not exit safely from their ultra-loose monetary policies. Any spike in global interest rates would be dangerous for the numerous countries in CESEE with high private and/or public external debt,” said Grieveson.
The report also singles out potential risks from East/West EU splits, the undermining of institu- tional independence in some countries, geopo- litical tensions, the Ukraine crisis, and potential spill-overs from a renewed outbreak of volatility in the eurozone, or a Chinese debt crisis.
The populist politics of some CEE countries, notably Hungary and Poland, have already put their leaders on a collision course with