INTERVIEW: “The weekend’s protests were the Russian peoples’, not the opposition’s” – Maxim Reznik
Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
Russia's NorNickel adopts blockchain for supply chain management
Russia goes ahead with eSIM technology
Russia's retailer X5 Group posts 13% sales growth in 4Q20
National Bank of Ukraine retains a key policy rate at 6%, the outlook of the CPI deteriorates
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
LONG READ: The oligarch problem
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Polish industrial production continues boom in December
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Pandemic pushes public debt close to 80% of GDP in Albania and Montenegro
BALKAN BLOG: Superstition and resentment surround vaccination plans
Albania needs reforms for e-commerce to thrive, says World Bank
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Kosovo’s biggest opposition party risks being unable to run in general election
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegro’s special prosecution probes finance minister over €750mn Eurobond issue
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
OUTLOOK 2021 Romania
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Slovenia’s economic sentiment indicator up 2.2 pp m/m in January
Slovenia lost €10bn by neglecting wood industry for decades
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
OUTLOOK 2021 Azerbaijan
OUTLOOK 2021 Georgia
Iran’s President Khamenei menaces private citizen Trump
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia, island of democracy
OUTLOOK 2021 Mongolia
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
More...
Economic consultancy Capital Economics has slashed its growth forecast for the Central and Eastern Europe (CEE) to a 2% year-on-year contraction from the previous 2.3% expansion in 2020, as the coronavirus (COVID-19) epidemic in Europe gathers momentum and most countries go into lockdown.
“Countries across Emerging Europe have stepped up their efforts to contain the coronavirus outbreak over the past week or so and the economic damage will now be much more severe than we had previously thought. Output will decline sharply in Q2 and, even if the outbreak is brought under control soon, all economies in the region look set to contract over this year as a whole,” Jason Tuvey, the senior emerging markets economist at Capital Economics, said in a note.
As bne IntelliNews reports, the coronavirus epidemic is approaching the exponential growth stage in some CEE countries, as many European countries have squandered the warning they had from China’s experience and then Italy’s and are only now putting strict social distancing measures in place.
In Central Europe and Turkey the governments are edging closer to full lockdowns, while the Russian authorities have been more relaxed in their approach and ruled out a lockdown in the capital. However, Moscow mayor Sergey Sobyanin told Russian President Vladimir Putin on March 23 that Russia is facing a “serious situation” as the coronavirus spreads, adding that "the real number of those who are sick is much greater" than official numbers indicate. Russia had only 495 confirmed cases as of March 24, but the number of pneumonia cases has soared by 40% in the last month, according to reports.
These measures are already leading to severe disruption to economic activity and will continue to do so over the coming weeks and months, says Tuvey.
“Few timely indicators are available, but the ones we do have show that traffic congestion in major cities is well below average levels and cinema ticket sales have plunged,” Tuvey added.
The countries that are most exposed to the economic impact of the virus are those that have large retail and tourism sectors. That puts Croatia and Turkey, where tourism plays a significant role in GDP, in the front line, as social distancing will mean an entire tourism season is likely to be lost this year. Countires with large retail and leisure sectors are also going to be badly wounded.
“These sectors generally account for 20-30% of GDP across the region, with Romania the most exposed, followed closely by Latvia and Poland,” says Tuvey. “Meanwhile, tourism sectors are at a standstill and the hit will intensify if travel restrictions remain in place over the summer peak season. Turkey and Croatia are particularly vulnerable.”
At the other end of the spectrum, countries like Russia have only a small exposure to retail and tourism.
At a secondary level the collapse in external demand and supply chains will weigh heavily on export-oriented sectors, with automotive being one of the most exposed.
“We now expect the eurozone economy to contract by around 12.5% quarter on quarter in Q2, which be much larger than the 6% peak-to-trough fall in GDP during the global financial crisis,” says Tuvey. “The Central European economies, which are heavily integrated into German manufacturing supply chains, are most susceptible, with a number of car plants across the region having already halted operations.”
Capital Economics has produced a new set of forecasts for growth in New Europe this year, but Tuvey warns that "forecasting is extremely difficult in this environment and the impact may turn out to be much worse than even we expect, but once the virus is brought under control, we think that looser policy will set the stage for a relatively swift recovery.”
Register here to continue reading this article and 5 more for free or purchase 12 months full website access including the bne Magazine for just $250/year.
Register to read the bne monthly magazine for free:
Already registered
Password could contain only a-z0-9\+*?[^]$(){}=!<>|:-_ characters and have 8-20 symbols length.
Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.
Forgotten password?
Email field can't be empty.
No user with this email address.
Access recovery request has expired, or you are using the wrong recovery token. Please, try again.
Access recover request has expired. Please, try again.
To continue viewing our content you need to complete the registration process.
Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.
If you have any questions please contact us at sales@intellinews.com
Sorry, but you have used all your free articles fro this month for bne IntelliNews. Subscribe to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free subscription to bne's digital weekly newspaper to subscribers to the online package.
Click here for more subscription options, including to the print version of our flagship monthly magazine:
More subscription options
Take a trial to our premium daily news service aimed at professional investors that covers the 30 countries of emerging Europe:
Get IntelliNews PRO
For any other enquiries about our products or corporate discounts please contact us at sales@intellinews.com
If you no longer wish to receive our emails, unsubscribe here.
Magazine annual electronic subscription
Magazine annual print subscription
Website & Archive annual subscription
Combined package: web access & magazine print annual subscription