Hot off the press: Our Spring Forecast Report for 23 countries in CESEE with the implications of the war in #Ukraine. Whereas 🇺🇦 (38-45%) & 🇷🇺 (9-15%) will shrink dramatically, EU-CEE countries will see slower growth or stagnation (depending on the scenario). 1/7 #Thread
The 11 EU members of the CESEE region will grow by an average of 3% this year in the baseline scenario; however, in the adverse scenario, which assumes an escalation of the war and a full EU energy embargo against Russia, they would stagnate (0.1%) in 2022. 2/7
If there should be an EU energy embargo against Russia, inflation rates will be in double digits in almost all countries of CESEE. In #Russia inflation could reach 28% this year, in #Ukraine 25%. In #Turkey, inflation will be around 55% – even in the baseline scenario. 3/7
In the negative growth scenario, i.e. escalation of the war and energy embargo against Russia, #Hungary and #Slovakia would be particularly affected in EU-CEE. 4/7
🇺🇦's budget deficit is likely to rise to 25% of GDP and will only be covered with Western financial aid. 🇷🇺 will also see a budget deficit this year of at least 3%. However, an EU energy embargo would jeopardise war financing only in the medium term due to 🇷🇺's fiscal leeway. 5/7
🇦🇹 obtains 80% of its gas from Russia. For Germany, economic research institutes expect a recession in the range of 0.5% to 6% of GDP next year in case of a gas embargo. In 🇦🇹, the slump could probably be even deeper than in Germany, given its greater dependence on 🇷🇺's gas. 6/7
The full Spring Forecast Report 2022 with the implications of the war in Ukraine for the 23 countries in Central, East and Southeast Europe (CESEE) by Vasily Astrov, @RicGri et al. can be purchased. For our members it is available free of charge. 7/7 wiiw.ac.at/overshadowed-b…
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