Central & Eastern Europe GDP (Q2 2021)

Re-opening boost pushes CEE economies above pre-pandemic levels

  • The Q2 GDP data for Central and Eastern Europe revealed that the regional recovery gathered pace last quarter as economies reopened following virus waves in Q1. We expect the recovery to remain strong in the second half of this year, although low vaccine coverage clouds the outlook in some economies.
  • With the number of new daily virus cases falling across Central and Eastern Europe (CEE), the widespread easing of restrictions on activity provided a reopening boost to the region’s economies in Q2. The largest quarter-on-quarter expansion was in Hungary, where GDP grew by an impressive 2.7% relative to Q1. GDP also increased at a robust pace of around 2% q/q in Slovakia, Romania and Poland. That said, output grew by a more muted 0.6% and 0.4% q/q in Czechia and Bulgaria respectively. (See Table 1.)
  • The continued strong performance in most of the region’s economies means that recoveries in CEE remain near the front of the EM pack and ahead of most other European economies. Romania’s economy is now 2.0% larger than it was in Q4 2019 and GDP in Hungary and Poland has now surpassed it’s pre-pandemic levels. That said, Czechia remains a clear outlier, with GDP still around 5% below where it was prior to the pandemic. (See Chart 1.)
  • While breakdowns of Q2 data are not yet available, Hungary’s outperformance last quarter was probably supported by its rapid vaccine rollout which allowed authorities to relax virus containment measures more quickly than in the rest of the region. Meanwhile, the re-opening boost hasn’t been as large in Czechia and the severity of its past lockdowns has weighed on overall activity.
  • In any case, we expect the reopening of economies to generally support recoveries in the second half of this year. The number of new virus cases remains low, restrictions have been relaxed further and vaccine coverage is relatively high in most places. Strong labour markets and loose fiscal policy will also support demand. That said, there are exceptions: the outlook in Bulgaria and Romania is more uncertain given that vaccine rollouts have been slower and new daily infections levels have started rising again this month.

Chart 1: Central and Eastern Europe Q2 GDP (SA% Change Vs Q4 2019)

Sources: National Statistics Offices, Capital Economics

Table : Central & Eastern Europe GDP (All data are seasonally-adjusted)







% q/q (% y/y)

% q/q (% y/y)

% q/q (% y/y)

% q/q (% y/y)

% q/q (% y/y)

% q/q (% y/y)

Q3 ‘20

+4.3 (-5.2)

+6.8 (-5.4)

+10.6 (-4.9)

+7.7 (-2.0)

+4.8 (-5.4)

+9.0 (-2.7)

Q4 ‘20

+2.2 (-3.8)

+0.7 (-5.3)

+1.6 (-4.1)

-0.3 (-2.6)

+4.0 (-2.3)

+0.5 (-2.7)

Q1 ‘21

+2.5 (-1.8)

-0.3 (-2.4)

+2.0 (-1.9)

+1.3 (-1.3)

+2.5 (-0.4)

-1.4 (+0.3)

Q2 ‘21

+0.4 (+9.6)

+0.6 (+7.8)

+2.7 (+17.7)

+1.9 (+10.7)

+1.8 (+13.6)

+2.0 (+10.2)

Sources: National Statistics Office, Capital Economics

Nicholas Farr, Assistant Economist, nicholas.farr@capitaleconomics.com

Nicholas Farr Assistant Economist
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