March 31 (SeeNews) - Serbia will be the country least affected by the coronavirus crisis in Central and Eastern Europe (CEE), as its economy is expected to contract by just about 2.3% in 2020, Erste Group said.
The bank has revised downwards its last economic growth forecast for CEE and now expects the average gross domestic product (GDP) of the region to shrink by 4.7% in 2020, Erste Group said in a research report on Monday.
"The closure of the service sector for at least a month and a half will halt consumption growth in such categories as restaurants, hotels, and culture. Tourism-oriented countries such as Croatia and Slovenia will thus face a severe recession (our estimates are at -7.5% and -6.7%, respectively)," Erste Group said.
The sharp drop of foreign demand will leave a mark on small open economies, it added.
According to Erste, Romania's economy is expected to contract by 4.7% this year.
Export growth will be negatively affected by production breaks across Europe and disruption in supply chains. In addition, income loss resulting from layoffs and lower compensations from government-sponsored schemes compared to regular wages are likely to limit household spending on durable goods and clothing for the rest of the year and rising unemployment will bring consumer confidence down, Erste said.
Erste's CEE region also comprises the economies of Slovakia, Poland, Hungary and Czechia.
As of March 13, Erste analysts had predicted that Romania's GDP will grow by 2% in 2020, while for Croatia they forecast economic growth of 0.5%. Serbia's economy was expected to grow by 3% in 2020, while Slovenia's GDP growth was forecast at 2.7%.