EECFA countries in the European Commission’s 2020 Macro Forecast

Before the 2020 Summer EECFA Construction Forecast Report was published, the European Commission released its forecast for the economic prospects for EECFA member countries. The main changes in prospects between Autumn 2019 and Spring 2020 have been collected in this article.

Written by Bálint Parragi, EECFA Research, ELTINGA

In Spring 2020, the global economy as a whole has been hard hit and shrunk due to the coronavirus pandemic, marking the end of many quarters and years of economic growth. According to data depicted on Chart 1, every country’s GDP growth decreased, but not to the same extent.

The countries having experienced high GDP growth (higher than 2.5% per annum) in Autumn 2019 are still growing, but very much less than before. Romania and Bulgaria have the highest absolute decrease with approximately a reduction of 3% and 2.5%, respectively. The economy of Serbia and Euroconstruct member Hungary slowed down too, but not as drastically as that of their eastern neighbours, so they have the highest GDP growth among these countries. Where growth was less and reduction was the same, the crisis created a stagnating or even shrinking economic status such as in the Euro Area, the EU and Turkey. The Russian economy even suffered a significant negative shock with a value of -0.7% per annum. All in all, EECFA countries still have a higher GDP growth than the others.

Looking at the gross fixed capital formation data (Chart 2), the situation is a bit different, but decreases are general. According to expected GFCF growth, Serbia lost little to its previous period value, ranking high above all other states. While Romania experienced a moderate drop, annual GFCF growth has nearly come to zero in Hungary, Croatia, Slovenia, the EU (the Eurozone as well) and Russia. The greatest falloffs are connected to Bulgaria and Turkey whose previous period value was by far the lowest and the only negative value among the examined countries.

Total construction growth has been revised downward everywhere, but while in Romania and Hungary it stayed positive (3-4%), it has come to zero in Slovenia and turned into negative value in Bulgaria, around -5% per annum. Construction’s share in total investment in the EECFA countries ranges from 57% (Slovenia) to 62% (Romania), with Hungary and Bulgaria in between (61% and 59% respectively).

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EECFA countries in the European Commission’s 2019 Macro Forecast

In Spring 2019, prior to the publication of the 2019 Summer EECFA Construction Forecast Report, the European Commission released its forecast for the economic prospects for EECFA member countries. Here is a summary of the main changes in prospects between Autumn 2018 and Spring 2019.

Written by Tünde Tancsics, EECFA Research, ELTINGA

Economic outlook is still better in the eastern region of Europe than in the rest of the continent, though it has slightly worsened in many countries of the EECFA region between Autumn 2018 and Spring 2019. The only exception among EECFA countries is Russia whose prospects have improved, as well as Hungary (covered by Buildecon in Euroconstruct) with almost 0.4 percentage points.

As Chart 1 shows, GDP growth in the eastern region is higher than the EU average, Turkey excepted where forecasted average annual GDP growth for 2018-2020 remains under 1.5%. As per data by the European Commission, economic prospects are the best for Hungary and Serbia that may see an increase in GDP by more than 3.5% annually between 2018 and 2020.

We have also examined Gross fixed capital formation increase in EECFA countries, in Euroconstruct member Hungary and in the EU. Chart 2 indicates that expected GFCF growth – as in case of GDP – is also higher in most EECFA countries. Moreover, the advantage of Serbia, Croatia, Hungary, Slovenia and Bulgaria is even bigger than the one experienced for GDP. GFCF prospects have greatly declined for Romania; average annual GFCF growth rate for 2018-2020 has shrunk close to zero by Spring 2019 from more than 5% in Autumn 2018. However, among EECFA countries Turkey is the only one where GFCF is set to decrease in 2018-2020.

Hungary is still leading in GFCF prospects with a nearly 10% projected annual growth rate. Slovenia ranks second and Serbia lines up third with both having an 8% growth rate. Hungary has come first in terms of predicted growth of construction investment (15%). Construction’s share in total investment in EECFA countries is between 57% and 65%, with Turkey having the highest rate. Romania also has a high rate of as much as 64%.

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