[ad_1]
The economies in the EBRD area of operation could fall more than expected this year. The Hungarian economy may perform 1.5 percentage points worse this year than previously expected, that is, it may contract 5 percent this year, which will not be fully offset by next year’s recovery. We can return to the pre-crisis level by the second quarter of 2022, based on the latest autumn regional forecasts from the European Bank for Reconstruction and Development. However, the international financial institution emphasizes that its forecasts are surrounded by a lot of uncertainty.
In countries where the EBRD operates, the decline due to the coronavirus epidemic will be greater this year than the bank assumed in its May forecast, but the EBRD highlights that the forecast is subject to significant uncertainties, that is, it will significantly depend on governments to introduce new ones. restrictions and how people respond to the additional presence of the virus infection.
According to the latest forecast, total emissions in EBRD member states will fall 3.9 percent this year, followed by a 3.6 percent increase in 2021. The May forecast predicted a 3.5 percent decrease. this year and a stronger 4.8 percent increase next year than the current forecast.
According to Beata Javorcik, EBRD chief economist, the EBRD region’s economy contracted better than before, by 8.2 percent in the first half of 2020. As she said, the recession was greater in many countries than during the crisis. financial world. And the recovery may be similar to the post-2008-09 crisis, which means the EBRD expects these economies to reach pre-crisis levels by the third quarter of 2022.
However, the organization warns that some sectors, such as tourism, may suffer permanent damage in the longer term, while other sectors (such as online commerce) could benefit from accelerated digitization.
Due to the epidemic, the biggest decline this year could be in Albania, Croatia, Cyprus, Greece and Montenegro, according to the EBRD, due to the decline in tourism. Furthermore, the epidemic significantly affects even Slovakia due to its integration into global value chains.
The EBRD area of operations included fiscal stimulus packages averaging 4.2 percent of GDP, which helped mitigate the effects of the crisis. The EBRD notes that in countries where these packages were larger, fewer jobs were lost and fewer family businesses had to close.
A significant increase in public debt is expected, around a third of which may be due to stimulus packages, with the economic recession responsible for most of the debt / GDP growth, but weakening of currencies, more recently in the States. members with high levels of foreign currency debt.
In the Central Europe and Baltic region, GDP is expected to contract 4.4% this year, as government stimulus packages have helped mitigate the impact of the crisis and private consumption in the region has dropped less than expected. The EBRD expects growth to reach 3.5 percent in 2021, with gradual normalization and an improvement in external demand, which could also be supported by EU funds.
Worse prospects in Hungary
The EBRD analysis of Hungary claims that the Hungarian economy stalled due to the orderly shutdown in March due to the coronavirus epidemic. As a result, the economy fell 5.8 percent year-on-year in the first half of this year, mainly due to a decline in net exports, investment and tourism receipts.
The unemployment rate increased to 4.9 percent in June 2020 from a record low of 3.4 percent in January 2020. Investment fell 9.2 percent in the first half of this year compared to an expansion of almost the 30 percent in 2019 despite government and central bank support for loans.
However, the EBRD notes that ongoing projects still look promising. Among the promised but postponed projects, the bank’s analysis mentions an investment in South Korea’s electric auto industry, the BMW plant, the Lidl logistics center near Budapest, and the Budapest-Belgrade railway line, which was completed in 2025. .
Overall, the board lowered Hungary’s economic growth forecast by 1.5 percentage points this year, thus expecting a 5 percent decline in GDP in 2020, but the economy says the economy could grow by 4 percent. cent next year, which is in line with the May forecast. The Hungarian economy is believed to be able to reach the level of GDP per capita in 2019 again in the second quarter of 2022.
However, the bank highlights that the forecast is surrounded by significant uncertainty, the realization of this scenario significantly depends on the management of social distancing and the coronavirus epidemic. The main risk factor for the Hungarian industry, but especially for the automotive industry, is the recovery of external demand.
The poles get smaller
Among the countries of our region, compared to the May forecast, the EBRD is where it has deteriorated, it is there where the EBRD has improved its May forecast. In the case of the Polish economy, the bank has not changed for 2020, it still expects a fall of 3.5 percent, while in 2021 it is projected to grow 1 percentage point 1 percentage point less than the May estimate.
In Slovakia, this year’s 7 percent decline is 1 percentage point higher than indicated in May’s forecast, and next year’s expansion is 2 percentage points slower than May, at 5 percent.
The Slovenian economy, according to the EBRD, could fall 2 more percentage points this year compared to the May forecast, that is, by 7.5 percent, followed by next year’s growth of 1.5 percentage points 1.5 percentage points slower than in May.
Among the Baltic states, the EBRD has improved the most in the case of Lithuania, the country’s economy may contract by 2 percent this year, which is 5 percentage points less than in May, but will be followed by growth of 1 percentage point slower, 4 percent next year.
[ad_2]
