Page 8 - bne_March 2025_20250304

8 I Companies & Markets bne March 2025
“Unchained” Trump is main risk to broadly positive Emerging Europe growth prospects
Clare Nuttall in Glasgow
Economic growth in Central, Eastern and Southeast Europe (CESEE) is set to accelerate in 2025, despite
a challenging global landscape and uncertainties surrounding the return of Donald Trump to the US presidency, according to the latest set of forecasts from the Vienna Institute for International Economic Studies (wiiw).
However, the think-tank warns that this outlook hinges on the assumption that an “unchained” Trump does not impose steep tariffs on the European Union or abruptly cut support to Ukraine. “Donald Trump unchained is the major downside risk,” says wiiw.
Growth in the region’s EU member states is projected to reach an average of 2.8% in 2025, with a slight dip to 2.7%
in 2026, wiiw said in its latest winter forecast emailed to
bne IntelliNews on February 4. The figure is a small minor downward revision from the think-tank’s previous estimates, but still indicates that the region will continue its economic catch-up process. Emerging Europe is set to grow at nearly twice the rate of the euro area, which is expected to expand by only 1.2% in 2025 and 1.4% in 2026.
“However, this assumes that Trump does not immediately
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impose high tariffs on the EU and that he does not grant Putin an easy victory in Ukraine by abandoning the country and cutting military and financial aid to it,” said Richard Grieveson, deputy director of wiiw and lead author of the forecast, according to a wiiw press release. “We are assuming this scenario.”
Industrial struggles
Several of the major Central Europea economies in the region – including Czechia, Hungary, Poland and Slovakia – as well as Romania, continue to grapple with headwinds from a prolonged downturn in German manufacturing, a critical driver of industrial demand. However, resilient private consumption, underpinned by robust real wage growth, is expected to sustain economic momentum, says the wiiw report.
“People are spending the additional disposable income, which is boosting the economy,” Grieveson noted.
Across the eastern EU member states, Poland is set to achieve the fastest growth over the next two years, with growth forecast at 3.5% in 2025 and 3.0% in 2026. Croatia follows closely behind, with expected growth rates of 3.1% and 3.0%, respectively.
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