WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Leon Podkaminer, Sandor Richter, Bernd Christoph Ströhm and Maryna Tverdostup

wiiw Forecast Report No. Autumn 2021, October 2021
139 pages including 30 Tables, and 46 Figures

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Executive summary
by Vasily Astrov
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1. Global overview: Hitting the limits
by Richard Grieveson
We have further revised upward our forecasts since the last update, reflecting stronger-than-expected activity during the middle of the year. However, while global momentum remains robust, at least in the US and China the current cycle appears to have peaked. Growth is coming up against increasing supply-side constraint, including increase input costs, longer waiting times, and labour shortages. Although these challenges appear manageable for now, the risks to the forecast are primarily on the downside, with the possibility of a more prolonged bout of high inflation a particular concern.
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2. CESEE Overview: Recovery beating expectations
by Vasily Astrov and Sebastian Leitner
The economic recovery in CESEE has strengthened further in recent months, resulting in a number of additional upgrades to our growth forecasts for 2021, to 5.4% on the regional average. This good performance has been built on two important foundation stones: the adaptation of the CESEE economies to the pandemic and the increasing reluctance of their governments to impose restrictions. However, the pace of recovery is projected to slow to 3.7% next year and 3.5% in 2023. The risks to this forecast are mostly on the downside, and include particularly unfavourable COVID-19 developments, premature fiscal consolidation, and the upcoming monetary tapering in the US.
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3.1 CESEE monitors
by Alexandra Bykova
The wiiw Business Cycle Index indicates that most economies in CESEE have regained their pre-pandemic levels of output. The visible underperformance in GDP relative to the long-term average, which was identified in the Spring, has vanished. Nevertheless, despite the economic revival and the recent rise in inflation, there have been generally few signs of overheating yet.
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