The Vienna Institute for International Economic Studies (WIIW) said on Tuesday that countries in Central, East and Southeast Europe (CESEE) are set for their worst year since the global financial crisis in 2007-2008 due to the coronavirus pandemic.
The extent of the impact will vary by country, depending on specific areas of vulnerability, WIIW said in an executive summary of its latest economic forecast for the region.
Countries with higher levels of trade integration with China (particularly CIS members such as Moldova) or Italy (especially Albania, Bulgaria, Croatia, Romania and Slovenia) will be worse affected, the institute noted.
Countries reliant on tourism, like Croatia, Slovenia, Albania and Montenegro will also be greatly affected.
"The capacity of healthcare systems to cope is also likely to vary considerably across the region," WIIW added.
In a separate press release, WIIW has revised its projections for 23 countries in the region according to four scenarios for the economic impact of the coronavirus, including a pre-coronavirus baseline, a ‘mild’, a ‘medium’, and a ‘severe’ scenario.
"Given the events of recent days, the ‘severe’ scenario has become the best case," the WIIW said, adding that most of the countries in the region will experience at least a technical recession.
WIIW’s ‘severe’ scenario assumes that the spread of the virus can be contained by the middle of 2020, and that a strong and coordinated policy response enacted by the world’s major economies. However, if those conditions are not met the economic fallout will be even more negative and long-lasting, the institute noted.
In all scenarios, the CIS countries and Turkey would be worst affected, while the impact of the COVID-19 on EU member states and some Western Balkan countries would be less severe.
"EU member states in the region are generally wealthier, have better healthcare systems, and will have more scope to enact expansionary fiscal and monetary policies to offset the downturn," WIIW explained in the press release.
"Overall, we expect much of the GDP lost now to be made up later. We cannot exclude a more ‘severe’ and longer-lasting demand shock, and a recession in parts of CESEE," WIIW concluded.
Details on the revised 2020 real GDP growth forecasts (in %) of WIIW for Southeast Europe (SEE) countries follow:
The CESEE region includes 11 EU-member states, six Western Balkan countries, four members of the Commonwealth of Independent States, as well as Turkey and Ukraine.