The Vienna Institute of Economics has improved Serbia’s GDP growth forecast, News
The Vienna Institute of Economics (WIIW) has published a winter forecast for the region of Central, South-Eastern and Eastern Europe (CESEE).
The institute has improved Serbia’s economic growth forecast for 2022 to 4.9 percent.
In the autumn forecast, WIIW predicted a growth of 4.6 percent for Serbia in 2022, so that the new forecast shows better economic development.
WIIW for 23 countries CESEE forecasts growth of 3.2 percent in 2022, which is 2.5 percent less than forecast in the fall.
The main reason for the growth revision for CESEE is the poorer growth prospects of Russia (two percent) and Turkey (3.5 percent), the two largest economies in the region.
When it comes to Serbia, WIIW gave a more positive forecast compared to the fall, and predicts economic growth of 4.9 percent for the current year.
For Northern Macedonia, a growth of 3.5 percent is forecast, and for Bosnia and Herzegovina 2.5 percent.
WIIW expects the effects of the pandemic on the economy to be limited, although the number of those infected in many Eastern European countries remains dramatic.
However, they warn that the low vaccination rate poses a risk, despite the milder omicron strain, to economic development.
“When it comes to Russia, new economic sanctions that threaten in the event of an armed conflict with Ukraine, as well as known structural weaknesses diminish the outlook,” said WIIW deputy director and author of the winter forecast, Richard Griveson.
However, he adds that Russia has “immune” its economy to punitive measures since the 2014 sanctions, so it could easily get over most of the sanctions.
Griveson points out that the situation with Russia could hit the EU harder, because if there was an armed conflict, then higher gas and oil prices would follow, which would encourage inflation.
Regarding Turkey, he points out that the main reason for the significantly worse prognosis is the collapse of the currency and the economic boom in recent years.
According to him, the massive growth of inflation limits the prospects for economic development, B92 reports.