Moody's: CEE region starts 2020 with negative outlook

The negative 2020 outlook for sovereign creditworthiness in Central and Eastern Europe (CEE) is driven by a weakening external environment, moderating growth and a lack of structural reforms, Moody's Investors Service said in report on Monday.
Rontott a magyar bankszektor megítélésén a Moody's

Moody's expects CEE growth to remain well over the European Union average. 

External headwinds will slow GDP growth to 3.3% in 2020 from 3.8% in 2019. Given broadly stable fiscal deficits, this growth will be sufficient to sustain the decline in already relatively low debt ratios, although performances will vary by country, Moody's said in a 14-page outlook presented in London today.

Resilient domestic demand and accommodative monetary and fiscal policy will support growth this year

, said Steffen Dyck, a Moody's Vice President - Senior Credit Officer and the report's co-author.

"However, the CEE's open economies are vulnerable to the deteriorating global environment and face persistent domestic pressure points," he added.

A dramatic shift in CEE demographics, a potential fall in European Union funding and slowing productivity growth have shifted the focus to structural reforms at a time when the political landscape is becoming less conducive to such reforms.

Further increases in the minimum wage are forecast in CEE countries in 2020 despite the weakening economic environment. Although supportive of short-term economic growth, this risks eroding the region's historical cost competitiveness, increasing unemployment and worsening social inequality.

Moody's projects CEE growth to exceed Eurozone GDP growth by 2.1 percentage points this year and by 1.6 ppts in 2021, after a 2.7-ppt lead it had in 2019.

More in Economy

koronavirus veszélyhelyzet tudnivalók
November 23, 2020 15:45

Deeper recession in Hungary in 2020, smaller rebound in CEE in 2021 - Erste

Growth takes the back seat for now

November 23, 2020 13:33

Hungary PM Orbán announces time slot for elderly shopping

For whom? From when? Where? - Just a few unclear issues

November 23, 2020 12:28

COVID-19: Hungary may restrict shopping again to protect the elderly

Not the same way as in the spring, though

November 23, 2020 11:14

Hungary to begin mass COVID testing this week

Targeted tests for health workers and teachers

koronavírus mti
November 23, 2020 10:08

COVID-19: More than 3,000 new cases in Hungary

Pandemic does not abate