Austerity Measures, Weakening Growth in Central and Eastern Europe in 2012

As exports and consumer demand slow and regional governments seek to reduce spending, growth is weakening across the region and a difficult year is ahead for both B2B and B2C MNCs. GDP growth forecasts will likely be revised further down as CEE economies struggle with continuing volatility and recession in the eurozone. Kazakhstan and Russia continue to benefit from high energy prices, but remain vulnerable to an oil price decline

Bulgaria: The economy will slow in 2012, but a conservative budget will act as a buffer against an external macroeconomic shock
Croatia: Croatia is in for a challenging 2012 that will bring austerity measures, pain for local consumers, and possibly a recession
Czech Republic: Avoiding a deep recession in 2012 is possible if there is clear progress on the eurozone crisis and the German economy remains strong
Hungary: The government will struggle to regain investor confidence as its controversial policies are undermining market trust in Hungary
Kazakhstan: MNCs can expect continuity in government policies and populist measures in 2012
Lithuania: The liquidation of a major local bank threatens to offset the budget this year and may mean more austerity measures
Poland: MNCs pursuing investments in Poland are well-positioned to capitalize on the country’s undervalued currency
Romania: Romanian consumers remain deeply pessimistic about the economy’s prospects, a trend that will impact consumer goods MNCs
Russia: Economic performance will slow only moderately as the government will support high consumer spending ahead of the elections
Serbia: The key driver for Serbia’s growth this year remains the economic performance of the eurozone
Slovakia: The consumer outlook remains negative through 2012 as any new government would have to cut public spending
Turkey: Economic growth will slow gradually over the next several months
Ukraine: Growth will slow this year and could decline sharply if commodity prices drop as a result of the recession in the eurozone