Growth across Central, East, and Southeast Europe remains resilient despite recent energy price shocks related to the Middle East, though the rate of expansion is slowing. A new spring forecast from the Vienna Institute for International Economic Studies (wiiw), covering 23 nations, indicates that while the region’s EU members are managing the current crisis, sustained high oil prices and energy instability pose significant risks. The established economic model, which relied on CEE acting as an extended production workbench for foreign investment, is reportedly under threat due to rising labor costs, falling foreign direct investment, and diminished industrial competitiveness.
For 2026, wiiw forecasts average growth of 2.3% for EU members, a slight downward revision. While Poland is projected to lead growth, the outlook for other nations varies; for instance, Estonia is expected to surpass Poland in 2027. Meanwhile, Ukraine faces a particularly challenging path, with forecasts suggesting growth of only one percent for 2026, severely impacted by the conflict and reliance on imported energy and fertilizer.
Russia is projected to experience near stagnation. The report cautions that in a protracted Middle East conflict, growth in some nations could be significantly reduced. The economic trajectory of the region remains highly sensitive to global energy market pressures.
While the region’s economies are currently being heavily pressed by inflation and supply chain disruptions, the data suggests that the foundational assumptions supporting past success are no longer robustly on the bench.
Topics: #energy #bench #pressed
