BAKU, Azerbaijan, June 6. Growth rates of Gross domestic product (GDP) in countries of Central and Eastern Europe, against the backdrop of the situation in Ukraine, have been revised from 4.7 percent to 3.1 percent, forecast of S&P Global Ratings agency said, Trend reports.
Agency’s forecast was reportedly revised down due to weaker growth in the EU, deteriorating private sector sentiment and higher commodity prices.
According to S&P forecast, consumer price index will rise from 4.4 percent to 8.5 percent on the back of higher energy and food prices. Also, the budget deficit will increase from 4.2 percent to an average of 4.4 percent of GDP due to a slowdown in GDP growth and tax revenues.
"We expect an increase in expenses associated with the influx of refugees, an increase in defense spending, also need to increase the wages of state employees and pensioners," agency noted.
It is also projected to increase imports and reduce external demand, which will lead to an increase in the current account deficit (CAD) from 1.4 percent to 2.8 percent of GDP.
Changes in forecasts for the Commonwealth of Independent States (CIS) countries, with the exception of Russia, Ukraine and Belarus, can be summarized as follows:
- GDP decline from 3.9 percent to 2.4 percent of GDP in 2022, mainly due to the possible consequences of the recession in Russia, combined with higher inflation, which negatively affects the purchasing power of households
- region's consumer price index to average 9.9 percent instead of 7.2 percent due to supply chain ‘bottlenecks’ and higher food and energy prices
- An increase in spending to reduce the impact of the conflict on macroeconomic indicators of the CIS countries will lead to an increase in the budget deficit from 1.9 percent to 2.2 percent of GDP
“Mainly due to higher oil prices, we now expect the current account deficit (CAD) in the CIS region to narrow from 1.7 percent to averaging 0.1 percent of GDP, primarily due to much more Azerbaijan's strong position on current accounts," the agency added.