Eastern European economies show divergent growth patterns

A report from the Vienna Institute for International Economic Studies (wiiw) reveals a significant economic divergence across Eastern Europe. While the region remains resilient despite energy price surges caused by the Iran-Iraq war, individual national trajectories vary widely.

Countries such as Poland, Kazakhstan, and the Western Balkan states are experiencing economic booms. Poland, in particular, is projected to see a record GDP growth of 3.7 percent this year, driven by high-tech industries and productivity investments. Hungary is also expected to see growth following political shifts.

In contrast, countries like Romania and Slovakia are struggling with high budget deficits and a weakening German automotive industry. Romania is projected to see a 0.4 percent decline in economic output. The report also notes that populist-led governments are facing greater economic weakness compared to liberal-led counterparts.

Regarding the ongoing conflict, the wiiw forecasts low growth of only 0.6 percent for both Ukraine and Russia in 2026. Ukraine's slow growth is attributed to Russian airstrikes on infrastructure. Overall, Eastern EU members are expected to grow at 2.2 percent, more than double the 0.9 percent growth projected for the Eurozone.