Central, Eastern and South-eastern Europe between High Inflation and Economic Slump in the Euro Area

GDP growth in the Central, Eastern and South-eastern European countries (CESEECs) slowed to just 0.8 percent in the previous year, but is expected to pick up again to 1.6 percent in 2023. This is almost entirely thanks to stabilisation in Russia and Ukraine, whose economies have largely adapted to the sanctions imposed by the West and war conditions respectively. In most other CESEE countries, a further slowdown is expected due to high inflation and the economic slump in the euro area. In this context, the Western Balkan and South-eastern European EU member countries are doing better than average because they are benefitting from high inflows of foreign direct investment, private remittances, tourism receipts and EU transfers. Although the peak has already been reached, inflation remains in double digits in many CESEECs. This makes an easing of monetary policy unlikely in the near future.