According to the report, the boom experienced by much of the CESEE region in 2017-18 is over, and growth rates will mostly trend lower in the next two or three years.
“Although strong wage rises, low interest rates and a generally positive outlook for investment will keep economic activity at reasonably robust levels, the peak of the cycle has passed. A mixture of serious external headwinds and domestic challenges will mean that most of the region’s economies expand more slowly in 2019-21 than in 2016-18”, the report reads.
The fastest-growing economies in 2019-21 will be Kosovo, Albania and Moldova, while the slowest will be Russia, Belarus and Turkey.
“Weaker global growth, US protectionism, Brexit and ongoing problems in the Eurozone represent a serious threat to CESEE’s export-reliant economies”, said the WIIW. “The challenges to medium- and long-term growth in CESEE are formidable. Demographic projections indicate a collapse in population that is unprecedented outside times of war and famine. Authoritarianism, state capture and interference in the independence of institutions are all on the rise. Generally low educational standards, levels of network readiness and ICT capabilities (in comparison with Western Europe) could hamstring CESEE’s ability to integrate into a digitalised global economy”, the report concludes.
When it comes to Bosnia and Herzegovina, the Vienna Institute for International Economic Studies forecasts 2.5 percent economic growth in 2019, 2.6 percent in 2020 and 2.7 percent in 2021.