Coface: Investments as a major driver of GDP growth in CEE in the coming quarters

Investments, along with private consumption, will be an important driver of economic growth in Central and Eastern Europe in the coming quarters, says Grzegorz Sielewicz, chief economist of Coface in the Central Europe Region.

"In the case of Poland, the data for Q1 2015 is somewhat surprising by the increase in investment - including corporate investment. Indeed, in many countries in Central and Eastern Europe, the use of production capacity in many countries is already at pre-crisis levels. Improvement in the industrial sector to a large extent and this is the first step to further investment growth. We expect that in the coming quarters, investments in Central and Eastern Europe will be a very important factor, in addition to private consumption, driving economic growth. At the end of the year, we should see the positive impact of the EU reconstruction fund, which will also support the economic situation and the level of economic growth in Central and Eastern Europe," said Sielewicz, presenting the report" Uneven and uncertain economic recovery in the world. Which countries and industries recover faster from the pandemic recession? " during the 15th edition of the Coface Country Risk Conference.

In the case of inflation processes, he indicated that the persistently low inflation in the period before the pandemic in Europe and in the world quickly recovered.

"We can see that PPI in the CEE region has increased significantly in recent months. Admittedly, the reference base is quite low in some countries, but the scale of acceleration is very important," assessed Sielewicz.

According to the chief economist, "it is unlikely that companies will be willing to sacrifice all their margins to keep product prices at current levels."

"There was a fairly quick rebound, mainly due to the increase in energy and fuel prices. The existing supply barriers, as well as the situation of companies passing higher production costs to consumers. In our opinion, it will be increasingly important, as well as the economic recovery stimulating growing individual demand, will translate into inflation level," added Sielewicz.

When presenting the Coface country risk assessment report, he indicated that ratings were likely to be upgraded and risk reduced for an increasing number of countries.

"We did not lower the ratings, as we did last year, there were increases - but mainly to those countries that coped better with the pandemic where the vaccination rate was higher - i.e. the United Kingdom, Israel, UAE or Chile, it allowed us to be more optimistic It seems that not only the vaccinations, but also the economic situation will be more and more important and in an increasing number of countries we will see an increase in ratings, that is, a lower risk," said Sielewicz.

At the end of April this year. Coface's global growth forecast has been revised upwards by half a point (+ 5.1% in 2021) thanks to higher-than-expected growth in the United States. Coface predicts the economic recovery will pick up pace starting in the summer of 2021, having vaccinated a sufficiently large proportion of the US and European populations. At the same time, it estimates that the euro area is unlikely to return to its pre-crisis GDP levels before 2022.

Source: Coface and ISBnews