Economic outlook
Subject to considerable uncertainty, and taking into account the extension of containment measures in the 1st quarter of 2021, on the one hand, and the hoped-for effects of the vaccination campaign on the other, the IMF expects a global recovery of 5.5% in 2021, with the developed economies expected to grow 4.3% and the emerging markets by 6.3%. With respect to the eurozone, Erste Group expects growth of 4.0% in 2021. In Austria, Erste Group analysts see another recession in the 1st quarter of 2021. A recovery is not expected to start until the 2nd quarter of 2021. Based on these forecasts, Erste Group reduced its GDP forecast for 2021 slightly downwards from 3.4% to 3.0%. It expects GDP growth to increase to 3.4% in 2022. In spite of the gradual opening of the economy, unemployment is expected to rise (5.6%), partly due to the phase-out of short-time work schemes.
Central and Eastern Europe is expected to record average regional growth of 3.8% in 2021, naturally including support from base effects. In spite of this recovery, wealth losses due to the COVID-19 pandemic are not expected to be recovered until 2022 at best. The Erste Group scenario forecasts GDP growth ranging from 5.0% in Serbia to 3.3% in the Czech Republic. Inflationary trends should be visible in the region, as everywhere else, but should initially be limited to temporary effects and remain within central bank tolerances in all markets. Central and Eastern Europe is expected to record overall inflation of 2.6%, with the lowest rate in Slovenia (0.8%), while Hungary is expected to be at the upper end with 3.7%. The increase in the unemployment rate expected for Central and Eastern Europe in 2021 (5.7%) should contribute to the moderate inflationary pressure before the employment situation improves in 2022.