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
Boom in CESEE-6 has peaked, stable but moderate growth in Russia
We predict GDP growth in the CESEE-6 countries3 to reach 3.9% per annum in 2018 and to moderate to 3.4% and 3.1% in 2019 and 2020, respectively. Over the entire projection horizon, Poland and Romania will be the growth leaders, while Croatia will see the lowest growth rates (below 3%). Economic growth is broad-based, benefiting from favorable internal and external conditions: strong wage growth supports private consumption, favorable financing conditions for households and corporates underpin lending, and the inflow of EU funds supports gross fixed capital formation especially in 2018. In addition, growth prospects for the euro area – the main trading partner of the CESEE-6 – have been revised upward since our last forecast. Downside risks to the outlook for the region emanate from both domestic and global factors and have increasingly been building up. Despite a strong growth momentum on the back of robust euro area growth, income convergence with the euro area will slow down to 1.4 to 1.5 percentage points over the forecast horizon from 2.3 percentage points in 2017.
Cut-off date for data: March 26, 2018