Directional Economics EMEA: Making the best of it

After facing three years of headwinds to economic growth, the economies of Central and Eastern Europe (CEE) might just be on the verge of an upturn. So far this year, most economies have managed to avoid the most pessimistic forecasts. And moving into the second half, we see the region ‘making the best’ of an admittedly still challenging environment.

In our main article, we analyse which economies in the region might be able to benefit from:

1. Modestly improving trade trends
2. Lower energy prices
3. The return of tourism to pre-pandemic levels

Incorporating these trends into our overall forecasts for the region, our team of economists feel that growth trends will improve in the second half. A major driver of this will be the broad disinflation process, where we forecast 2024 inflation at roughly half that seen in 2023.

A clear disinflation process should mean less pressure on real household incomes, and suggests that domestic demand will not weigh as heavily on activity as it has done during the recent cost of living crisis. There will be key differences across the region driven by the local political climate, which our team delve into in further detail here.

As always, this Directional Economics showcases ING’s global reach with our local team of experts in the CEE region. Please reach out to them with any questions. We very much hope you enjoy reading it as much as we do sharing our latest views.