Wiiw Forecast: Economic Growth in Central and Eastern Europe Defies Global Uncertainties
Despite weakening industry, private consumption remains a strong growth driver and makes a significant contribution to the region's economic stability. At the same time, the unpredictable economic policy decisions of the USA under President Trump pose considerable risks for the export-oriented countries in Central and Eastern Europe.

The economies of Central, Eastern, and South Eastern Europe are facing a challenging year characterized by geopolitical tensions and economic uncertainties. Nevertheless, current forecasts show that the region will record solid growth despite these risks. Strong private consumption in particular is supporting the economy, while the export-oriented industry continues to struggle with difficulties.
Despite ongoing global uncertainties, the Vienna Institute for International Economic Studies (wiiw) is forecasting solid economic growth for the countries of Central, Eastern, and South Eastern Europe. According to the latest winter forecast, average GDP growth for the 23 countries surveyed will be 2.7% in 2025 - a slight downward correction of 0.4 percentage points compared to the fall forecast. The EU member states in the region in particular will expand at an above-average rate of 2.8%, although the forecasts have been revised downwards slightly.
Private consumption as a growth driver despite weak industry While export-oriented industry, particularly in Poland, the Czech Republic, Slovakia, Hungary, and Romania, continues to suffer from the recession in Germany, private consumption remains a key driver of growth. Driven by rising real wages, consumers are spending the additional income directly, which is strengthening the domestic economy.
“People are using their increased disposable income for consumer spending, which is driving economic momentum,” explains Richard Grieveson, Deputy Director of wiiw and lead author of the forecast. Poland will take a leading position in this development: Growth of 3.5 percent is expected for 2025, followed by Croatia with 3.1 percent. The Western Balkan states and Turkey will also record strong growth averaging 3.5% and 4.5% respectively (2026).
US economic policy under Trump is a risk
The unpredictable economic policy of US President Donald Trump poses a significant risk to the economic stability of the region. If high tariffs are imposed on European goods, this could hit the heavily export-dependent countries of Eastern Central Europe particularly hard. The future US policy towards Ukraine is also of crucial importance.
The economies of the Czech Republic, Hungary, and Slovakia, which are heavily integrated into the German automotive industry, could be particularly affected. Poland, on the other hand, could suffer less from trade conflicts due to its more diversified economy. According to S&P Global, increased US tariffs and uncertainties regarding the Russia-Ukraine war could impact growth in the region due to weaker demand from Western Europe.
“Should Trump drastically cut or even stop financial and military support for Ukraine, this could have dramatic geopolitical and economic consequences,” warns Grieveson. This could not only jeopardize Ukraine's stability but also trigger a new wave of refugees to the EU and drive up food prices.
Poland's need for reform for sustainable growth
Despite its strong growth, Poland must implement reforms in order to remain competitive in the long term, as Reuters reports. Experts are calling for increased investment in research and development (R&D) to promote innovation and reduce dependence on traditional industries.
Another critical point is the green transformation. Poland needs to reduce its dependence on fossil fuels, especially coal, and invest in renewable energy to ensure a sustainable economy in the long term. At the same time, the investment climate needs to be improved by strengthening legal certainty and transparency to encourage foreign investment. Reforms are also needed in the area of the rule of law. The implementation of rule of law principles not only strengthens democracy, but also secures access to EU funding, which can be used for infrastructure and education investments.
Russia's growth about to slump, Ukraine with uncertain forecast
Russia, which recorded GDP growth of 3.8% in 2024, is forecast to grow by just 1.8% in 2025. This is due to the restrictive monetary policy of the Russian central bank, which has raised the key interest rate to 21% to curb the high inflation rate of 9.5%. In addition, new US sanctions against the Russian energy sector are likely to further slow economic momentum.
The forecast for Ukraine is also characterized by uncertainty. While the wiiw expects growth of 3% for 2025, the actual development depends heavily on the political and military situation. If Trump pressures Ukraine into a dictatorial peace with Russia, this could not only worsen the prospects for economic recovery but also deter foreign investors.
Growth Prospects for the Western Balkans
According to a report by the World Bank, as reported by Reuters, economic growth in the six countries of the Western Balkans - Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia - is expected to reach 3.7 percent in 2025. This is a slight increase on the previous forecast of 3.5 percent. This growth will be driven by rising consumer spending, investments and improved purchasing power.
The European Union plans to invest EUR 6 billion in infrastructure and structural reforms in the region to enable closer integration with the single market. This could help to further promote economic development. However, the World Bank warns of risks such as a possible global economic slowdown, rising inflation, and political uncertainties that could hamper growth.
Positive development with risks
Despite the challenges, the economic outlook for Central, Eastern and South Eastern Europe in 2025 remains positive overall. Growth continues to outperform that of the eurozone, underlining the region's catch-up process with Western Europe. However, geopolitical risks - in particular the unpredictable US economic policy, the war in Ukraine and potential trade conflicts - could have a significant impact on development in the coming years.