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The Crisis is Over, but its Scarring Effects are Hindering Recovery

Author

Listed:
  • Vasily Astrov

    (The Vienna Institute for International Economic Studies, wiiw)

  • Alexandra Bykova

    (The Vienna Institute for International Economic Studies, wiiw)

  • Rumen Dobrinsky

    (The Vienna Institute for International Economic Studies, wiiw)

  • Selena Duraković

    (The Vienna Institute for International Economic Studies, wiiw)

  • Meryem Gökten

    (The Vienna Institute for International Economic Studies, wiiw)

  • Richard Grieveson

    (The Vienna Institute for International Economic Studies, wiiw)

  • Doris Hanzl-Weiss

    (The Vienna Institute for International Economic Studies, wiiw)

  • Marcus How
  • Gabor Hunya

    (The Vienna Institute for International Economic Studies, wiiw)

  • Branimir Jovanović

    (The Vienna Institute for International Economic Studies, wiiw)

  • Niko Korpar

    (The Vienna Institute for International Economic Studies, wiiw)

  • Sebastian Leitner

    (The Vienna Institute for International Economic Studies, wiiw)

  • Isilda Mara

    (The Vienna Institute for International Economic Studies, wiiw)

  • Olga Pindyuk

    (The Vienna Institute for International Economic Studies, wiiw)

  • Sandor Richter

    (The Vienna Institute for International Economic Studies, wiiw)

  • Marko Sošić
  • Bernd Christoph Ströhm

    (The Vienna Institute for International Economic Studies, wiiw)

  • Maryna Tverdostup

    (The Vienna Institute for International Economic Studies, wiiw)

  • Zuzana Zavarská

    (The Vienna Institute for International Economic Studies, wiiw)

  • Adam Żurawski

Abstract

Economic growth will strengthen in most countries of CESEE in 2024, as falling inflation boosts real incomes and consumer spending. The outlook for investment is more mixed, while the external sector in CESEE is still waiting for a recovery in German industry. Although the medium-term outlook is reasonably positive, CESEE faces significant downside risks to growth, including a potential victory for Donald Trump in the next US election, higher energy prices due to tensions in the Middle East, a delayed German recovery, and financial instability caused by high real interest rates.

Suggested Citation

  • Vasily Astrov & Alexandra Bykova & Rumen Dobrinsky & Selena Duraković & Meryem Gökten & Richard Grieveson & Doris Hanzl-Weiss & Marcus How & Gabor Hunya & Branimir Jovanović & Niko Korpar & Sebastian , 2024. "The Crisis is Over, but its Scarring Effects are Hindering Recovery," wiiw Forecast Reports Spring2024, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:fpaper:fc:spring2024
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    Keywords

    CESEE Central and Eastern Europe; economic forecast; Western Balkans; CIS; Ukraine; Russia; Turkey; EU; business cycle; economic sentiment; euro area; convergence; labour markets; unemployment; Russia-Ukraine war; commodity prices; inflation; price controls; trade disruptions; renewable energy; gas; electricity; monetary policy; fiscal policy; impact on Austria;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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