HUNGARY
Investment in manufacturing and infrastructure is expected to drive momentum in economic growth in Hungary. GDP growth of 3 per cent in 2014 and 2.4 per cent in 2015 will be spurred by an expected €22bn (£17.2bn) in EU fund inflows in 2014-20, which is equivalent to roughly 20 per cent of 2012’s GDP. The economy is highly geared to Germany – exports to that country represent about 20 per cent of Hungary’s total exports. Therefore, the nation’s economic performance is strongly tied to the general condition of the EU’s biggest economy.
CZECH REPUBLIC
The Czech Republic’s GDP is expected to grow by 2.4 per cent in 2014 and 2.7 per cent in 2015, which is mainly driven by improvements in private consumption and exports. The nation will also benefit from the expected €22bn in EU fund inflows in 2014-20, which is equivalent to 15 per cent of 2012’s GDP. The Czech Republic is also highly geared to Germany – exports to that country represent close to 25 per cent of GDP.
TURKEY
The Turkish economy is expected to increase by roughly 3 per cent in 2014 and 4 per cent in 2015. Exports have started losing momentum partly due to geopolitical issues (especially in Iraq) and general weakness in global demand. In contrast, domestic demand has been recovering, mainly as a result of a decline in lending interest rates. Interest rates are expected to be lower in the latter part of 2014, further supporting domestic demand. However, turmoil in Iraq continues to affect regional stability and could lead to higher oil prices.
RUSSIA
The Russian economy is expected to grow by only 0.4 per cent in 2014 and 1 per cent in 2015, with import substitution partially offsetting the sharp slowdown in domestic demand. The recovery of growth is subject to, and very much dependent on, developments in the Russia-Ukraine conflict. A key factor is the sanctions imposed on Russia by the western countries. So far, the US/EU sanctions cover all major state-owned banks, as well as selective energy companies and commodity producers. It has been estimated that the ban of food and agriculture products imports could lead to an increase of as much as 1 per cent in consumer prices.
