Erste Bank predicts that the economy of Serbia will be the first in the region to return to the level before the corona crisis, more precisely in 2021, and Croatia at the latest, only in 2023.
According to the latest forecasts of the Austrian creditor, Erste Bank analysts expect that the economies in the region of Central and Eastern Europe (CEE), after an estimated decline of 5.1 percent this year, will recover by 3.6 percent next year.
The recovery will be driven by consumption and exports, but it is noted that the second wave of the pandemic and the potential delay in activating the EU Recovery Fund will affect the speed of recovery.
CEE economies will return to pre-crisis levels only in 2022, with the exception of Serbia, which will reach pre-crisis levels as early as 2021, and Croatia, which will only reach it in 2023, the analysis estimates.
“The pace of recovery is somewhat slower due to the negative impact of the second wave of the pandemic on quarterly growth in the fourth quarter of 2020 and the assumption that some restrictive measures may remain in force in the first quarter of 2021,” Erste analysts note.
Annual GDP growth, they add, will jump to a high percentage in the second quarter, due to a very low comparative base caused by this year’s spring locking measures.
“In the second half of 2021, annual growth should normalize and accelerate slightly by the end of the year,” Erste said in its forecasts.
The bank, however, notes that there is a lot of uncertainty regarding the further development of the pandemic, which could affect growth in both directions.
An earlier start of vaccination, successful treatment of patients infected with the corona virus or more efficient and accessible testing, would definitely improve the situation and increase the chances for faster and more lasting recovery, reports the Seebiz portal.
On the other hand, any delay in vaccination or new waves of pandemic followed by partial closure would make recovery very fragmented.
“Due to the delay in approving the EU budget, we are quite conservative in terms of the availability of funds from the next generation EU grant schemes in 2021, and we expect that a significant part will arrive only in 2022/23,” states Erste, B92 reports.
