For those who thought price increases and inflation were bad, economists have bad news for them: Now things are really getting started.
Even though prices are skyrocketing and energy is becoming increasingly scarce, “so far the war in Ukraine has not had such a negative impact on the economies of the 23 countries of Central, Eastern and South-Eastern Europe as initially supposed,” says the new autumn forecast from the Vienna Institute for International Economic Studies (wiiw). Gloomy postscript: “But that will change in the coming months.” According to the study’s lead author, economist Branimir Jovanovic, the “economic shock caused by the war” is already having an impact.
“Uncontrolled inflation is hurting real income and therefore private consumption, which has been the most important pillar of growth so far. In addition, there is the increasingly threatening energy crisis, the weakening of the German economy, rising interest rates and insufficient fiscal support from the worst is yet to come in Eastern Europe first,” said Jovanovic. For 2022 as a whole, the wiiw forecasts growth of 3.9% for EU member states in the region, 3.1% for the Western Balkans and 5.1% for Turkey.
Russia’s economy is shrinking, but slowly
“In contrast, the Russian economy will shrink by 3.5 percent this year. However, this recession will be much milder than anticipated in the summer,” he says. At that time, minus seven percent had been assumed. Things are looking bad for Ukraine – for this year, the wiiw expects GDP to drop by about a third compared to 2021. But: “In 2023, Ukraine can already grow again by 5.5 percent.” However, because of the war, predictions should be treated with caution.
Inflation, on the other hand, will be 13% in most EU countries in 2022 and will at least slow down a little to 8% in 2023. But here, too, there is a scare: “If gas has to be rationed in some places in winter, some countries can go into recession”, says Jovanovic. And if Germany slips into recession, close trading partners such as Austria, the Czech Republic, Hungary, Slovakia and Poland could be affected. This means that “nothing good can be expected for Austria next year”.
rfi navigation account Time 10.19.2022, 20:35| Act: 10.19.2022, 20:41