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bne April 2020 Central Europe I 45
Coronavirus crisis to widen rich/poor gap within Central and Eastern Europe
Clare Nuttall in Glasgow
The economic crisis resulting from the coronavirus (COVID-19) pandemic will be deeper and longer in the CIS, Ukraine, Turkey and the Western Balkans than in the EU member states of Central and Southeast Europe that are much better equipped to deal with it was the key takeaway from the Vienna Institute for International Economic Studies’ (wiiw’s) webinar on March 18.
The Vienna-based think tank has already slashed its forecast for this year to just 1.1% across the Central, Eastern and Southeast Europe (CESEE) region, but warns that the situation could worsen considerably.
The consensus is now that countries in the region are likely to follow Italy – that as of March 19 had over 30,000 cases – despite their efforts to contain the virus. While cases in countries in the region are so far numbered in hundreds rather
than thousands, governments have introduced lockdowns with a crippling effect on their economies, to delay the peak of the epidemic and reduce the pressure on their healthcare systems.
wiiw deputy director Richard Grieveson forecasts restrictions could be relaxed after around six weeks, but may be reintroduced in case of further waves of infection. And while there may be
a tentative recovery this year, a return to normal economic life is not expected until a vaccine is found – “our best estimate is around 18 months,” he says, which would mean no real recovery before 2021.
wiiw economists consider the best case of a recession in H1 followed by recovery in H2 is now looking highly optimistic and increasingly unlikely. Taking China has a guide would mean a contraction
of 3-4% this year for all countries. However, said Grieveson, for some countries in the region the contraction will be much worse.
The only good news is that previous experience has shown that a crisis caused by health factors – rather than a financial crisis – tends to be followed by a strong recovery.
“While cases in countries in the region are so far numbered in hundreds rather than thousands, governments have introduced lockdowns with
a crippling effect on their economies”
The latest data on coronavirus (COVID-19) infections in Europe from the World Health Organisation.
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