Political uncertainty was the dominant topic in 2019. Although Brexit formally came into force on 31 January 2020, and an initial agreement temporarily settled the trade conflict between China and the US, the prospect of further negotiations being needed is nevertheless a source of continued uncertainty. As a result, the International Monetary Fund (IMF) expects a further slowdown in global economic growth to a real rate of 3.0% in 2019. While real growth was still 2.3% in the developed economies in 2018, the IMF only expects an increase of 1.7% in 2019. Growth stimulus should therefore be expected to come from the emerging markets instead. The outbreak of the coronavirus pandemic at the beginning of 2020 and the far-reaching measures taken to prevent its spread will also have a negative effect on growth.
The economic slowdown, which was already apparent in the eurozone in 2018, continued in 2019. Real growth, which was still 1.9% in 2018, was 1.2% in 2019. Economic growth of 1.6% is expected for Austria, which is a slowdown compared to the 2.4% growth recorded in the previous year. As in the eurozone as a whole, domestic demand was the main driver in Austria, with private and public-sector consumption and investment making positive contributions to GDP growth. Austrian prices also showed a certain increase in inflation at the end of 2019, recording an overall inflation rate of 1.5% compared to the previous year.
Erste Group analysts observe a slight increase in inflationary pressure in Central and Eastern Europe. An overall inflation rate of 2.7% (2018: 2.4%) is expected for the region in 2019. Similar to the eurozone, the growth slowdown recently observed in quarterly figures will lead to weaker growth in 2019. The Erste Group expects average real GDP growth of 3.7% for Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia. The rate was still 4.4% in 2018. Hungary is expected to record the fastest growth of 4.9%, followed by Poland and Romania, each with real GDP growth of 4.0% in 2019. The region therefore has a considerable growth advantage over Western markets, in spite of the slowdown.