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July 12, 2019 www.intellinews.com I Page 12
Central European economies decouple from Eurozone slowdown
Clare Nuttall in Glasgow
Economists from wiiw have revised upwards their forecasts for Central and Southeast European economies as wage-driven growth has stopped them from following the Eurozone into a slowdown.
Previously, analysts had been predicting a cooling off of growth in the Central and Southeast Europe region, caused by the global cooling of GDP growth, which has already been observed in the Eurozone. With many of the region’s economies closely linked to Eurozone countries
– in particular Germany – as their main export markets, they were expected to follow.
But while there has been a cooling down in some places, it is much less than wiiw expected in spring, leading to an upgrade of forecasts for this year, wiiw economists said in a webinar on July 4. For many countries, the upward revisions in growth forecasts have been "positive and strong”, following surprisingly strong results
in 1Q19, they said.
These include substantial upward revisions of 1.3 pp to 4.1% for Romania for 2019, 0.8pp to 4.1% for Hungary, 0.9 pp to 4.6% for Poland and 0.7 pp to 3.5% for Bulgaria, in wiiw’s report “Eastern Europe standing firm in face of global headwinds”.
“Growth rates in Germany and the euro area have decelerated from 2Q18, but on the other hand in the EU CEE countries growth performance been relatively stable and there has even been a slight upturn in 1Q19,” said wiiw economist Vasily Astrov.
“This is very remarkable — it shows that growth performance has decoupled to some extent from growth in the euro area and Germany. This is not intuitive because most countries in CEE
are small, open economies strongly integrated with euro area and Germany in particular.”
wiiw notes the strong export performance in several countries across the region, and