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2023/02/24 / Erste Group Research

CEE Special Report: The war in Ukraine - one year in twelve charts

We look back at the past year, month by month, and point to most important developments and implications for the region. First, initial fears about direct economic impacts of the war outbreak did not materialize. The hit from the war took the form of surging commodity prices, translating into exorbitant inflation and massive monetary tightening in the CEE region. Against initial expectations, the CEE region expanded in 2022 and we expect countries to avoid full year recession also in 2023. Declining inflation should allow some central banks to begin with monetary easing.

Further, trade with Russia collapsed. Total exports to Russia halved compared to the pre-war value. Imports from Russia have not seen such a dramatic reduction due to inflated prices of certain commodities. However, the value of imports has decreased in some sectors by 50%.

Energy transformation will be one of the most important and long-lasting impacts of the war. The CEE region as a whole complied with the reduction of gas consumption requirement. Further reduction of demand will be needed to avoid gas shortages in the 2023/24 winter season. The use of gas in net electricity generation also dropped. Although the drop involves only 2.1% of total electricity generation, it is encouraging that the use of wind and solar has increased. The setback of limiting the gas usage is an increase in coal as a source of electricity generation, though.

Military expenditures will increase. The leader in our region is Poland, which commits to spend approx. 4% of GDP in 2023. Romania, Slovakia, Hungary and Croatia are expected to reach (or exceed) the 2% mark next year as well, paving the way for the less-eager governments of Czechia and Slovenia. It is expected that the whole region will reach 2% by 2025.

Finally, the increased willingness of the EU and its members to expand their ranks is another consequence of the war. Not only EU, but also NATO membership has been in demand as Sweden and Finland submitted their applications.

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General information

AuthorErste Group Research
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


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