On 1 December, the OECD published its autumn economic projections in the OECD Economic Outlook 2021. In this webinar, we focused on the situation in Central and Eastern Europe (CEE) and discussed economic perspectives for the Czech Republic, Hungary, Poland, Slovakia and Slovenia.
Presentation:
Alvaro Pereira, OECD Economics Department, Paris
Martin Borowiecki, OECD Economics Department, Paris
Discussion with:
Jakub Matějů, Czech National Bank, Prague
Péter Lőrincze, National Association of Entrepreneurs and Employers, Budapest
Moderation: Matthias Rumpf, OECD Berlin Centre
Key Points:
The economic development in the CEE region will to a large extent mirror the development of the global economy. Some important differences, however, include faster growth paths, tighter labour markets and more dynamic price and wage developments. International supply chain disruptions have a negative impact on exports. Inflation is on the rise because of higher energy prices and producer prices as a result of bottlenecks in supply chains. Strong domestic demand has led to a recovery of employment in some countries. The dynamic labour market is also fueling labour costs.
In order to steer inflation back to target, monetary policy tightening is recommended. A gradual fiscal consolidation is appropriate given the strong economic growth. Policy should stand ready to continue supporting the economy in case new lock-down measures reduce domestic spending. Nonetheless, fiscal consolidation will be necessary in the medium-term to address ageing-related spending pressures. Structural reforms should focus on easing labour market tensions and raising potential growth.