Why this is important to Wisconsin businesses: Austria, Poland and Germany are projected to have faster-than-average recoveries.
COVID-19 has led to a worldwide recession that has especially impacted the European Union economy, leading to a predicted EU-wide decrease in GDP of 8.2% in 2020, according to the summer 2020 European economic forecast by the European commission. While some countries in Southern Europe (such as Italy and Spain) have been affected very strongly, some countries in Central Europe have been affected less, and are thus expected to recover at a faster pace starting in the second half of 2020. Among those countries, Austria, Poland and Germany provide an especially positive outlook and should therefore be looked at closely by Wisconsin businesses seeking export opportunities.
Austria was among the first countries in Europe to impose a strict lockdown, starting on March 16. The strict lockdown proved successful, allowing the country to also be among the first to relax its restrictions, starting April 14. Even though the Austrian economy has been hit hard by the lockdown, the quick government reaction and comparatively early relaxation led to a strong but short market downturn, with a slow rebuild expected in the second half of 2020. For the full year of 2020, experts currently predict a GDP decrease of 7%. For 2021, a rebound by 5.5% is expected. An early indicator of the positive outlook for Austria’s economy is the increase in private consumption starting in May. While sectors such as the machinery industry and other export-oriented sectors are continuing to struggle and are expected to only slowly recuperate in 2021, other sectors such as construction and consumer goods have been affected less and could therefore make Austria an interesting target market for Wisconsin businesses.
Poland’s economic diversification and relative independence from the sectors that were most affected by COVID-19 (e.g., entertainment, hospitality, tourism, long-distance passenger transport), in combination with a relatively low number of infections and good crisis management with early border closures, have led to one of the smallest recessions in the EU, as GDP is expected to drop by only 4.5% in 2020 and grow almost back to pre-crisis level in 2021 (+4.2%). In addition, Poland benefits from its strong pre-crisis performance, since in recent years, Poland’s economy has regularly grown by 3% to 5% annually. Private consumption is expected to stay conservative, whereas business, with the exemption of the furniture and automotive industries, is expected to recover at a faster pace starting in July. This makes Poland one of the most interesting markets within the EU to watch in 2020.
In Germany, the EU’s largest economy, good crisis management and early supporting measures imposed by the government have led to a comparatively low recession, as GDP is predicted to decrease by 6.3% in 2020 and rebound by 5.3% percent in 2021. The recovery is expected to begin in the second half of 2020. While domestic demand is stimulated through fiscal stimuli such as lower value-added tax rates in effect from July to December 2020, expected to be at least partially passed on to consumers, Germany’s strong export orientation still affects industry production, as order receipts are increasing only slowly. Nevertheless, the business outlook is becoming more positive again, leading to new opportunities in the German market.
Find further information on current economic predictions for the EU member countries at: https://ec.europa.eu/info/sites/info/files/economy-finance/ip132_en.pdf