Russia’s Strong Economy Outperforms the Eurozone and Ukraine’s Outlook Becomes Uncertain: An Insight from wiiw

The Vienna Institute for International Economic Studies (wiiw) has recently revised its growth forecast for the Russian economy, which is currently under Western sanctions, upwards. Russia’s economy is growing more strongly this year compared to Central and Eastern European EU countries and much more strongly than the almost stagnant Eurozone. However, the outlook for Ukraine has become more uncertain.

For 2024, wiiw predicts an average growth of 2.6 percent for the EU members in Central, Eastern and Southeastern Europe, which is expected to increase to 3 percent in 2025. This growth rate significantly outperforms the Eurozone, which is expected to grow at 0.6 percent this year and 1.6 percent next year. The main drivers of growth include the rise in real wages, which is stimulating private consumption, despite a portion of additional income being saved.

The industry of the EU members in the region is experiencing a recession, largely due to the crisis in German industry. Poland is leading the growth among eastern EU members, with an expected growth rate of 3.3 percent this year and 3.6 percent next year. The southeastern European EU members like Romania and Croatia are also expected to grow strongly in 2024, benefitting from funds from the Corona reconstruction fund NextGeneration EU.

The outlook for Russia has been revised upwards by wiiw, with the country expected to grow at a rate of 3.2 percent this year