The economic recovery in Central and Eastern Europe from COVID-19 is expected to significantly accelerate in 2021.
According to Fitch Ratings’ international credit rating forecast, Hungary’s gross domestic product (GDP) will grow by almost 7 percent in 2022. Fitch analysts point out that each of the 11 EU member states in Central and Eastern Europe will be a net recipient of free benefits from the EUR 750 billion recovery fund announced as part of the Next Generation EU and that these economies will also receive new low-cost loans under the program.
According to a study by Fitch Ratings, the EU recovery program is already having a positive impact on economies in Central and Eastern Europe this year due to a concentrated use of funds at the beginning of the period, but the additional growth momentum from EU funds is expected to become even more significant in 2022.
Based on this, Fitch’s model calculations show that the average economic growth rate, weighted by the real value of the gross domestic product, will be 3.8 percent in 2021 and 5.5 percent next year for the region as a whole.
In the case of Hungary, the agency’s London analysts say the benefits of the recovery fund will reach 4.35 percent of GDP and loans made available on preferential terms will be equivalent to 6.8 percent of Hungary’s gross domestic product.
All in all, the credit rating company expects that the Hungarian economy will grow by 4.9 percent in 2021 and by 6.9 percent in 2022, after a probable 6.2 percent decline for 2020.
Fitch expects Hungary to have the fastest annual growth rate in the region, while it estimates 2021/2022 growth rates in the Czech Republic of 4.4 percent and 5.7 percent and 3.3 percent and 5.1 percent in Poland.
The London Investment Division of Morgan Stanley Global Financial Services Group annual study for 2021 predicts that the Hungarian economy may outperform Central and Eastern Europe, as its structure is more open than other economies in the region, and this feature offers the opportunity for a strong rebound this year and next. Morgan Stanley’s London analysts expect GDP growth in the Hungarian economy to be 3.9 percent in 2021 and 6 percent in 2022, after a 6.8 percent decline in 2020.