WIIW forecast: Eastern European economy on the upswing

WIIW forecast: Eastern European economy on the upswing

According to a forecast, the economy in the Central, Eastern and Southern European countries will experience positive development in the current year. This positive development is supported by rising real wages and a sharp decline in inflation, making private consumption the mainstay of growth. Despite this positive outlook, downside risks remain, mainly related to the weak German economy.

The Vienna Institute for International Economic Studies (WIIW) forecasts average economic growth of 2.5 percent for the region's EU member states in 2024, which is expected to rise to 3.0 percent next year. By comparison, the European Union's economy is expected to grow by just 0.6 percent this year, according to European Central Bank forecasts. This shows that the East Central European EU members are continuing their economic catch-up process even two decades after the EU's eastward expansion.

There are still problems in the industry, particularly in the Visegrád states of Poland, the Czech Republic, Slovakia and Hungary. The recovery of the German economy, which is expected from 2025, plays a crucial role for the region. Even stronger economic development is expected in southeastern European countries such as Romania and Croatia, which are expected to record growth of 3.0 percent and 2.9 percent respectively. The Western Balkan states and Turkey will also record growth of 3.0 percent and 3.4 percent, respectively.

Despite military setbacks and delays in financial and military aid from the West, Ukraine's modest recovery continues, with growth forecast at 3.2 percent. The Russian economy is expected to expand slightly more slowly after strong growth last year, with a forecast of 2.8 percent this year. However, increased military spending and rising wages have helped the economy improve.