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2020/01/30 / Erste Group Research

CEE Special | CEE resilient to coronavirus

The impact for CEE economies stemming from China and World GDP slowdown (if any) should remain limited if the virus is contained within a short period of time. CEE, as a net commodity importer, could benefit from lower commodity prices.

The outbreak of the recent coronavirus (nCov-2019) has resulted in increased uncertainty and market fears about economic development, as the number of infected persons has been rather dynamically increasing.

Concern regarding more pronounced impact has been rising simply because markets seem more fragile compared to the time when SARS hit at the end of 2002. Back then, the share of the Chinese economy in global GDP was much lower (8.7% vs. 19.3% as of 2019, according to the IMF), and thus the world was more resilient to weakening demand in China. Further, the global economy was on a solid recovery path. SARS brought Chinese growth down only between the first and second quarter of 2003 (from 11% to 9%), while annual growth dynamics remained unaffected. Some studies suggest, however, that without SARS, Chinese GDP could have been higher by 1%.

The full impact of the coronavirus is yet to be seen. The further spread of the virus primarily hits the sector of services in China and weakens domestic demand. The impact for CEE economies as a whole should remain negligible if the virus is contained within a short period of time. If anything, the negative effects are likely to come indirectly through lower global growth due to a slowdown in China and increased levels of uncertainty. Particular sectors such as commodity producers (copper and steel, in particular) or Global Value Chains exclusively relying on inputs from China are more likely to suffer from production breaks. Tourism is also likely to face a slowdown. On the other hand, CEE, as a net commodity importer, could benefit from lower prices.

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General information

AuthorErste Group Research
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


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