Modest Recovery in the East – Envisaged EU Leave of UK Poses New Uncertainties

The international environment for Central, East and Southeast Europe (CESEE) is affected by the weak recovery in the euro area. Over the medium term, we expect a GDP trend growth rate of up to 3 percent for CESEE. Household consumption will be an important component of economic growth, especially for the EU members in Central and Eastern Europe. In the countries of the Western Balkans investment and net exports will be important growth drivers. In the Commonwealth of Independent States and in Ukraine the economic downturn has bottomed out and, after a period of stagnation, slow growth may be expected there as well. The Austrian economy is still benefiting from its economic ties with CESEE. Direct effects of the envisaged EU leave of the UK on the region will be limited – indirect effects for the European economy as a whole may be considerable.