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2020/09/14 / Erste Group Research

Looking beyond 2020

We revised 2020 growth forecast up in most CEE countries (no broad-based lockdown scenario). In 2021, solid recovery is expected, with level of output coming back to pre-pandemic level at end of next year. Beyond 2021, positive impact of EU Recovery Fund should accelerate growth and help to mitigate, at least partially, output loss caused by pandemic.

Risks to our forecasts are related to the pandemic development in the autumn. Rising cases across countries may bring local restrictions, mostly impacting the service sector and slowing the pace of the recovery. It remains unclear whether and/or how people will adjust their behavior to the pandemic outbreak, regardless of restrictions. The other issue is the labor market development. In particular, whether unemployment rate will increase further once government schemes come to an end. At this point, we do not expect a broad-based lockdown. In such a case, downward revision of growth would be very likely.

For next year, we expect GDP growth to rebound and land between 4% and 6% across the region. Such dynamics should ensure the level of output coming back to the pre-pandemic level at the end of 2021. Beyond that year, the positive impact of new EU funds (Recovery Plan) on the growth should facilitate further recovery and mitigate, at least partially, the output loss caused by the pandemic. We estimate that, in 2022, the EU Recovery Fund may add between 1pp and as much a 2pp to a country’s growth, depending on the countries’ effectiveness in utilizing the funds on projects.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE
Currency in focus-
Sector in focus-


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