TIRANA (Albania), November 7 (SeeNews) - The countries in Central, East and Southeast Europe (CESEE) are being affected by a slowdown in the global economy, the Vienna Institute for International Economic Studies (WIIW) said.
“Global economic growth is at its weakest since the 2008-2009 crisis, and there is no way that the region will be able to avoid being affected, given its high degree of reliance on exports and its integration with Germany,” the WIIW said in a press release on Wednesday.
According to WIIW estimates, in the CESEE region GDP growth is expected to slow down to 3% in 2019, from 3.8% last year and 3.9% in 2017. For 2020-2021 the thinkptank's projections are for regional growth of 2.9% on average.
“Although the peak years are over, we expect a soft landing for CESEE, rather than an outright collapse,” the institute noted, adding that the domestic demand will remain resilient, helped by strong wage growth, robust public investment, loose fiscal policy and plentiful credit.
Downside risks are significant, and include a smaller post-Brexit EU budget, the fallout from global trade tensions, the impact of political developments in CESEE on institutions, and potential instability emanating from the financial sector, the institute also said.
“The region’s economies are generally quite export reliant, with only three - Russia, Turkey and Kosovo - having an export/GDP ratio below the global average,” the WIIW said, adding that a sizeable number of CESEE economies are heavily plugged into the German manufacturing core, which is currently at its lowest ebb since the depths of the 2008-2009 crisis.
According to WIIW, countries with particularly high degrees of exposure to Germany and where the automotive sector plays a large role in manufacturing – including the Visegrad countries, Romania, North Macedonia and Serbia – are particularly vulnerable.
“This over-specialisation in automotive production represents a risk for the future,” the think-tank said.