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2020/12/01 / Erste Group Research

Halfway to recovery in 2021

We expect CEE economies to rebound by 3.6% in 2021. The second wave of the pandemic and potential delay in the functioning of the Recovery Fund will weigh on the speed of recovery which will be driven by consumption and exports. CEE economies will return to pre-crisis levels only in 2022, with the exception of Serbia (in 2021) and Croatia (in 2023).

The pace of recovery is somewhat slower due to the negative impact of the second wave of the pandemic on quarterly growth in 4Q20 and assumption that some restrictive measures may remain in place in 1Q21. Annual GDP growth will jump to high positive numbers in 2Q, reflecting the very low base caused by this year’s spring lockdown. In 2H21, annual growth is to normalize and slightly accelerate by the year-end.

There is plenty of uncertainty surrounding the further development of the pandemic, which may affect growth on both sides. Earlier vaccination, successful treatment of patients with COVID19, or more efficient and accessible testing would definitely improve the situation and boost confidence in a faster and more durable recovery. On the other hand, any delays in vaccination or further waves of the pandemic followed by partial lockdowns would make the recovery very fragmented. Due to delays in the approval of the EU Budget, we are rather conservative regarding the availability of funds from the Next Generation EU grant schemes in 2021 and expect the significant part to arrive only in 2022-23.

CEE currencies have been on a rollercoaster ride so far in the fourth quarter. November brought some relief on FX markets. The US election results helped investor sentiment, and encouraging vaccine news also boosted risk appetite. The Czech koruna gained the most, as interest rate expectations went up in November. The zloty gained somewhat less, as the rate outlook was more stable in Poland. The Hungarian forint did not manage to firm too much. Rate expectations notably declined, which did not support the forint. In addition, the ongoing debate around the proposed EU rule of law regulation also did not help.

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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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