Prague, Czech Republic – The Czech Republic’s gross domestic product is likely to drop this year as a result of the coronavirus crisis, ING analysts have warned.
Czech economy faces possible recession
According to ING’s updated forecasts for growth and policy rates, Central and Eastern European economies will be heavily impacted, as other countries around the world, by the spread of Covid-19 and restrictive measures introduced by national governments to contain the viral outbreak.
The outlook is particularly bleak for the Czech Republic, which is expected to fall into recession this year, while Hungary and Poland’s economies should be only just able to remain in positive growth territory.
“The Czech economy falling into recession has become our baseline scenario as Covid-19 measures not only affect domestic but also foreign demand significantly”, ING CEE analysts write, noting that the full effect of the economic downturn should become acutely apparent in the second quarter of the year.
Poland and Hungary’s GDP to stagnate in 2020
Only a few weeks ago, Poland and Hungary were slated to rank among the EU’s fastest-growing economies in 2020, with EU Commission estimates forecasting GDP growth rates of 3.3% and 3.2% respectively for the two Visegrad states.
The spread of the coronavirus has drastically changed the outlook. According to the Dutch bank, Hungary’s gross domestic product should grow by only 0.5% in 2020 thanks to “a rebound in the second half” of the year. ING analysts lowered Poland’s GDP growth to 0% year-on-year, including due to the shutdown of the services sector, weak investment demand and lower household expenditure.
“The bulk of the hit on the Polish GDP is likely to happen in late March and early April”, the bank forecasts.
According to ING, Romania could also face a recession in 2020.