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Eastern European Outlook, March 2015: Baltics and Central Europe resilient to Ukraine conflict and Russian recession - Seite 2

Ukraine is in an acute economic crisis, with nearly empty central bank reserves. The recently approved expansion of international bail-out loans and a coming debt write-down by private bond holders will enable the country to avoid default.

Here are the GDP forecasts for the six countries that Eastern European Outlook covers. SEB's forecasts for 2015 and 2016 are generally somewhat below consensus. 

• Russia's GDP will fall by 5.0 per cent in 2015 and by 1.0 per cent in 2016. A slight oil price upturn will help stabilise the economy. The rouble is vulnerable but will gradually regain strength.
• Ukraine will see a continued GDP decline this year, totalling 6.0 per cent. The country's falling currency - which will turn around and show a slight appreciation - will contribute to weak export-driven growth of 1.0 per cent in 2016.
• Poland, with relatively solid fundamentals, will experience GDP growth of 3.4 per cent this year and 3.6 per cent in 2016, making it the fastest-growing economy in Central and Eastern Europe. The negative impact of Swiss franc appreciation on many Polish home mortgage loans will be relatively minor.
• Estonia's strongly export-oriented economy is slowly working its way out of a relatively deep 2013-2014 growth slump. GDP will rise by 2.2 per cent this year and 2.7 per cent in 2016.
• Latvia will see unchanged 2.4 per cent growth this year, following by an acceleration to 2.7 per cent in 2016. The approaching presidential election may lead to political instability, but the economy is robust.
• Lithuania's growth will slow a bit this year, to 2.6 per cent, but accelerate to a solid 3.5 per cent in 2016. The important energy sector will achieve a more secure situation, helped by a new liquefied natural gas terminal and electric power links that will radically decrease the country's dependence on imported Russian energy.

For further information, please contact Mikael Johansson, Head of Eastern European Research, SEB Economic Research [phone], [phone] [e-mail] Andreas Johnson, SEB Economic Research [phone], [phone] [e-mail]

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