Central & Eastern Europe Economic Outlook
The regional economy should expand at a softer clip this year compared to 2022. Sticky inflation will squeeze savings and purchasing power and, coupled with high interest rates, hit domestic demand. Moreover, global economic headwinds will restrain industrial output and exports. Energy prices and the evolution of the war in Ukraine will be key.
Central & Eastern Europe Inflation
Regional inflation dropped to 14.4% in April from 16.4% in March; price pressures softened throughout the region. Inflation should continue to gradually decline ahead, although statistical carry-over, fast nominal wage growth and prolonged pass-through effects will keep it elevated. Regional currencies’ strength and energy price swings are key factors to watch.
This chart displays Economic Growth (GDP, ann. var. %) for Central & Eastern Europe from 2010 to 2021.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Economic Growth (GDP, ann. var. %) | 5.0 | 4.7 | 3.9 | -3.4 | 6.4 |
| Private Consumption (ann. var. %) | 5.3 | 4.8 | 3.5 | -3.8 | 6.4 |
| Exchange Rate (LCU per USD, eop) | 31.8 | 34.3 | 35.9 | 34.7 | 38.0 |
| Fixed Investment (ann. var. %) | 5.5 | 9.3 | 7.6 | -2.9 | 2.3 |
| Industrial Production (ann. var. %) | 6.3 | 4.4 | 1.9 | -4.7 | 11.2 |
| Unemployment (% of active population, aop) | 5.9 | 5.0 | 4.5 | 5.8 | 5.2 |
| Fiscal Balance (% of GDP) | -0.9 | -0.5 | -1.0 | -6.9 | -4.1 |
| Public Debt (% of GDP) | 47.5 | 45.2 | 43.1 | 53.9 | 52.9 |
| Inflation (CPI, ann. var. %, aop) | 2.0 | 2.5 | 2.7 | 2.6 | 4.4 |
| Policy Rate (%, eop) | 1.21 | 1.58 | 1.63 | 0.45 | 2.10 |