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SEE GDP to drop 2.5% in 2020 over coronavirus - RBI

Author Iskra Pavlova
SEE GDP to drop 2.5% in 2020 over coronavirus - RBI Author: RBI. Licence: All Rights Reserved.

ZAGREB (Croatia), March 19 (SeeNews) - Raiffeisen Bank International (RBI) said it has revised sharply downwards its 2020 GDP growth outlook for Southeast Europe (SEE), now expecting a decrease of 2.5% instead of 2.7% increase, as economies get paralysed by restrictions called for by the coronavirus spread.

"Given the unprecedented restrictive measures to contain the spread of Covid-19, we anticipate a severe European recession of -4% in 2020, with a substantial output decline in H1," RBI said in its 2019 financial report published on Wednesday.

According to the report, the second-quarter GDP drop in Europe is seen steeper than the fall registered during the financial crisis, and is expected to harm the domestically-oriented sectors.

"Accordingly, we have significantly revised our outlook for the CE/SEE region. Restrictive local measures, supply chain disruptions and a challenging outlook for tourism could lead to GDP contractions of -2% to -6% in 2020," RBI said.

It added that bold monetary and/or fiscal measures could lead to stabilisation in the second half of 2020 and provide for a strong recovery in 2021.

According to RBI's revised forecasts, the economic contraction in SEE this year will be driven by an expected GDP drop in Croatia, Bulgaria, Bosnia and Romania, while the economies of Serbia and Kosovo are still anticipated to expand, and Albania to record zero growth.

For SEE, RBI previously anticipated GDP growth of 2.7%. The earlier forecast was made in November, when the bank published its financial results for the first nine months of 2019.

The Vienna-based banking group has revised upwards its 2021 GDP growth forecast for the SEE region to 3.9% from 2.1%.

Following are RBI's latest forecasts on SEE's 2020-2021 GDP performance:

  2019 2020 - new fcast 2020 - Nov fcast 2021 - new fcast 2021 - Nov fcast
SEE 3.6 -2.5 2.7 3.9 2.1
Albania 2.5 0.0 2.3 3.5 2.5
Bosnia and Herzegovina 2.5  -3.9  1.9 3.7 2.3
Bulgaria 3.4   -3.9 2.5 3.5 2.9
Croatia 2.9   -4.8 2.5 3.6 1.8
Kosovo 4.1   1.5 2.7 4.0 3.0
Romania 4.1   -2.5 3.0 4.5 2.0
Serbia 4.2   1.5 2.5 2.5 2.0