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In the countries of Central and Eastern Europe, the crisis with the coronavirus will be severe. But suddenly they can have a series of economic benefits. Several German publications look at the region. Thus begins an analysis by Deutsche Welle on “After the coronavirus: how Bulgaria, Romania and Poland can win.” According to some German media, countries like Bulgaria and Romania will painfully experience the economic consequences of the coronavirus crisis on their backs.
Millions of citizens of Central and Eastern European countries work, or have at least recently worked, in the wealthier countries of North-Western Europe. And they moved billions of their family members home each year. According to the World Bank, only Romanian players in the West import two billion euros into their country year after year. But players’ money will not just drop sharply: Jobs in Central and Eastern European countries will also drop, says Züddeutsch Zeitung, noting that Volkswagen closed its plants in Poland, the Czech Republic and Slovakia in March. Romania closed the Dacia and Michelin plants.
Also, in countries like Romania, Bulgaria or Poland, most entrepreneurs are actually very small companies that have no reserves and run out of opportunities quickly. That is, they are threatened with bankruptcy to a greater extent, according to the publication.
Bulgaria: tourism losses will be devastating
Central and Eastern European countries will also suffer large losses due to the collapse of tourism. This will seriously affect Bulgaria. There, the share of tourism in GDP is as high as 14%, while in the Czech Republic it is 8%. Poland will painfully feel the lack of German tourists in Warsaw, Krakow and Gdansk. Not to mention that tens of thousands of German shopping tourists leave a lot of money every month in Polish and Czech stores.
There was also an intense movement of people and goods in the opposite direction, which has now ceased. Observers also point out that the countries of the former Eastern Bloc will also suffer the diminishing purchasing power of their citizens and, consequently, their consumption. However, this money will also lead to a decrease in imports of foreign goods to these countries.
Compared to the West, Central and Eastern European countries are also less prepared for such an economic earthquake, writes Züddeutz Zeitung. Handelsblatt also draws attention to the issue. The newspaper quotes the Vienna Institute for Comparative Economic Analysis, which expects the economic recession in these countries to be worse than that experienced during the financial crisis of the first decade of the 21st century, and that a “deep recession” will ensue.
Analysts at Goldman and Sachs expect the Czech economy to shrink by 5% and the Polish economy by 3.5%. The Eastern Commission for German Economy (the most competent body for economic relations between Germany and the countries of Central and Eastern Europe) recalls that Germany will suffer a sharp contraction in its trade with these countries. In 2019, this trade totaled EUR 303 billion, more than Germany’s trade with China or the US. USA Recall that last year Bulgaria recorded record trade with Germany: more than 8 billion euros.
When the storm passes
However, Michael Harms, executive director of the Eastern Commission for the German Economy, believes that, after the first shock, the countries of Central and Eastern Europe can be profitable. He hopes that several German and European manufacturers will move their production facilities in Asia to Asia. Eastern Europeans are extremely competitive, says Harms.
However, he also made it clear that there is a great shortage of qualified professionals in this region. Harms is convinced that after the crisis, “the economy in Eastern Europe will heat up much faster.” He predicts that truck drivers, for example, are likely to escape northern Italy but not Eastern Europe.
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