CESEE outlook


The OeNB and the Bank of Finland Institute for Economies in Transition (BOFIT) compile semiannual forecasts of economic developments in selected CESEE countries. They are based on a broad range of available information, including country-specific time series models for Bulgaria, Croatia, the Czech Republic, Hungary, Poland and Romania. The projections for Russia were prepared by the BOFIT and are based on an SVAR model.

OeNB-BOFIT outlook for selected CESEE countries

Investment-driven upswing in CESEE and comeback of growth in Russia

The outlook for real GDP growth in the CESEE-6 countries foresees an upswing to 3.4% per annum in 2017 followed by some moderation in 2018 and 2019. Our forecast is largely in line with forecasts by other institutions, except as regards Hungary. Particularly for Hungary but also for Poland we expect expansionary policy measures to feed through strongly on economic performance. Over the projection horizon we see a clear improvement of investment growth in all CESEE-6 countries in correspondence with the EU funding cycle. Private consumption growth will remain an important growth driver – backed by rising real disposable incomes due to favorable labor market developments and somewhat stronger lending to households. Against this background, import growth will keep on growing robustly. Yet the contribution of net exports will be negative from 2017 onward in most countries. Overall, income convergence with the euro area will progress: The growth differential will rise to 1.8 percentage points in 2017 and slightly decelerate to 1.6 percentage points by 2019.

For Russia, we expect annual GDP growth to come in at 1.5% in 2017. The projection has been revised upward due to climbing oil prices and stronger growth in 2016 than anticipated earlier. GDP growth is expected to continue at a similar pace also in the coming years, as the economy is already operating near full capacity and necessary structural reforms are not in sight.

The cut-off date for all projections was March 27, 2017.

Outlook for selected CESEE countries (PDF, 0.5 MB)