Romania could be the fastest-growing economy in CEE, Erste estimates

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This year, the GDP growth of 3.1 percent of Central and Eastern Europe (CEE) will exceed that of the euro zone by 1.6 percent, despite slowdown in inflows of EU funds, an Erste Group analysis reveals on Wednesday, showing that the growth of the Romanian economy could speed up to 4.1 percent, while Poland (3.6 percent) and Slovakia (3.5 percent) are expected to roughly maintain their pace in 2015.

Thus, “Romania could be the fastest-growing economy in CEE, but this comes at the expense of fiscal loosening and prospects of monetary tightening. We see a slowdown in Hungary (2.2 percent) and particularly in the Czech Republic (2.5 percent) due to declines in the inflow of EU funds to these economies. Some slowdown is also expected in Slovenia (1.9 percent),” Austrian analysts expect.

In 2015, the average unemployment rate in the CEE region fell into single-digit territory for the first time since 2009 and is expected to decline further in 2016.

As CEE countries are net energy importers, the recent decline of crude oil prices will support economic growth and fiscal easing in Poland and Romania will improve the domestic demand, Erste Group notes.

European Commission (EC) recently announced that Romania’s economic growth rate would reach a peak of 4.2 percent in 2016, thanks to strong wage growth and fiscal easing and a moderate growth to 3.7 percent in 2017.

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