Italian banking group UniCredit expects the real gross domestic product (GDP) of Central and Eastern Europe (CEE) to expand by 4.4% this year, up 1.8 percentage points compared to its previous projection, the group's Bulgarian unit said on Monday.
In 2022, the region's economy is expected to grow by 4.1%, down from 4.4% forecast previously, UniCredit Bulbank said in a statement.
The real GDP of the CEE region dropped by 4.2% last year, according to data by UniCredit.
According to UniCredit, CEE's economy will recover to the pre-crisis levels in the last quarter of 2021.
CEE will post inflation of 3.4% at the end of 2021. The region's inflation will then fall to 2.3% at the end of next year, the statement showed.
The banking group also expects a reduction in the unemployment rate by the middle of 2022. The region's unemployment rate is forecast to ease to 4.1% next year, compared to 5.2% expected this year.
The more optimistic forecast is due to the very strong results of the CEE economy in the first quarter of 2021, which in turn is associated with relaxed restrictive measures. "In addition, the solid growth of revenues from retail sales, industrial production and construction output in April indicates that the strong economic recovery continues in the second quarter of this year," the statement reads.
The biggest risk to the macroeconomic forecast is associated with another wave of the coronavirus pandemic in the fall or winter of 2021, as only 13% of the population in CEE were vaccinated by the middle of June, UniCredit Bulbank noted.