Warsaw, Poland – The European economy is slowing down, but Visegrad Group countries are still among the fastest-growing economies and main drivers of robust growth in the EU.
The European Commission Spring 2019 Forecast expects the EU economy to further slow down this year as a result of weakening growth of the global economy and trade, tightened financing conditions, unresolved trade tensions, as well as “social tensions and policy uncertainty”.
The EU 27’s economy should grow by only 1.4% in 2019, and 1.2% for the Eurozone. While Germany’s slowdown remains the main cause for concern, as the GDP of the EU’s biggest economy is only set to expand by 0.5% this year, other European economic powerhouses such as France (+1.3%) and Italy (+0.1%) are also tempering economic prospects.
Central European economies, meanwhile, rank among the fastest-growing in the bloc.
Poland has second highest GDP growth in the EU
With a 4.2% GDP growth in 2019, Poland ranks as the second fastest-growing economy in the EU, according to the European Commission, only topped by Malta (+5.5%). After estimating Poland’s annual growth rate at 3.5% last February, the EU Commission upgraded its forecast due, according to Economy Commissioner Pierre Moscovici, to surprisingly good results in last year’s fourth quarter.
Although a sign of Poland’s economy’s robustness, these figures also point to a progressive slowdown of GDP growth, compared to +5.1% last year and a forecast of +3.6% in 2020
Caution should also be exercised due to other worsening macroeconomic indicators: Poland is expected to report an impressive 1.2 percentage point drop in its public budget balance, with the deficit due to rise from -0.4% to -1.6% this year, the biggest fall recorded in the EU.
Slovakia and Hungary also in top 5 fastest-growing economies
Although ranked as the fastest-growing developed economy in the world by the OECD, Slovakia comes right after its Polish neighbour, with a GDP growth forecast of 3.8% in 2019 (third highest in the EU, tied with Ireland) and 3.4% next year – compared to a 4.1% growth in 2018. Unemployment is also expected to drop to 5.9% in 2019 compared to 6.5% last year. “Slovakia’s brisk economic expansion is expected to moderate slightly in 2019 and 2020”, writes the EU Commission, who points to “buoyant wage increases and robust private demand”.
With a 3.7% growth in 2019, Hungary ranks as the fifth fastest growing economy in the EU, according to the European Commission forecasts – which also highlights a rapid slowdown of the Hungarian growth, compared to a 4.9% expansion last year and expected to drop to 2.8% in 2020.
With a 3.2% inflation rate, Hungary records the second fastest-galloping prices after Romania (3.6%) and more than twice as much as the EU average. Unemployment is expected to stabilize at around 3.5%. “After a strong 2018, Hungary’s economic expansion appears to be running into capacity limits”, warns the European Commission, that points to growing signs of the economy overheating.
Czech economy lags behind and continues its slow-down
The Czech Republic’s results are the most disappointing among Visegrad economies, with a 2.6% growth in 2019 and 2.4% in 2020, confirming a long-expected slowdown.
The Czech economy still boasts the lowest unemployment rate in the EU, set at 2.2% this year, according to the European Commission.