June 17 (SeeNews) - The economic output of the 11 EU member states in Central and Eastern Europe, including Bulgaria, Croatia, Romania and Slovenia, is expected to recover to pre-crisis levels by next year, but the speed of recovery will vary, Berlin-based Scope Ratings said on Thursday.
Manufacturing production is running near pre-pandemic levels, but services have not fully recovered, Scope said in its June 2021 Sovereign Interim Outlook.
The economies of CEE countries more reliant on services, such as Croatia, lag, it added.
Romania's economy should grow by 4.8% in 2021, and by 4.7% in 2022, according to Scope Ratings.
Scope expects Slovenia to grow around 4.5% both in 2021 and in 2022, while Bulgaria's economy is forecast to expand by 5.4% in 2021 and 4.7% in 2022.
Croatia's economic growth is seen at 5% this year and at 5.8% next year, Scope also said.
"We project headline budget deficits to remain elevated around 6% of gross domestic product (GDP) on average among EU CEE member states this year (moderating somewhat from about 7% of GDP last year), with fiscal policies remaining supportive of recovery, which, however, delays needed budget consolidation to 2022 and beyond," Scope said in its report.
Elevated public debt accrued in the crisis increases fiscal vulnerabilities with a higher share of debt to be rolled over near term - gross government financing needs in 2021 are near or above 10% of GDP across most governments of the region, Scope noted.
Foreign-exchange reserves of regional central banks should remain adequate to address possible exchange rate volatility as global central banks ponder normalisation of crisis policies, supported by curtailed net external debt positions pre-crisis and enhanced resilience during periods of capital outflow, it added.