Turmoil in financial markets, a contraction in Western Europe, sour investor confidence, and national lockdowns from the pandemic have driven Central Europe into a notable contraction throughout 2020. Solid macroeconomic fundamentals, timely government response, and ambitious stimulus packages have softened the impact of the crisis on regional economies, paving the way for a notable rebound in 2021.
However, a recovery in external demand, labor market improvements, and growth in consumer spending will ensure that the region will see a resilient recovery going forward, presenting new opportunities to businesses across all core customer segments. The pace of the recovery will vary significantly, however, not only among regional economies, but also in customer sub-segments, necessitating a strong focus on execution and strategic planning for 2021.
Recovery in both external and domestic demand dynamics will ensure a resilient and robust rebound going forward. Recovery in the external environment and domestic demand dynamics will provide a boost to local labor markets, leading to a pro-cyclical recovery in 2021. The pace of the rebound will vary significantly, however, with markets in Southeast Europe experiencing a relatively softer improvement.
Access to the EU’s recovery fund and the beginning of the new EU 2021–2027 fund will fuel public investments. The EUR €750 billion fund that includes a mix of loans and grants will provide the necessary infusion of capital to sustain new public investment projects and ease fiscal pressures on local governments.
Mobility trends across Central Europe suggest that consumer behavior is returning to pre-COVID-19 levels at a relatively quick pace. Consumer behavior across Central European markets is gradually returning to pre-COVID 19 trends and will support the resilient recovery of consumer spending going forward into 2021.
Watch our Central and Eastern Europe 2021 Outlook webinar recording, during which our analysts provide their outlook for Central Europe, drivers of growth in the major markets and demand segments, as well as key actions executives can take to mitigate risks and capture opportunities.
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