The eurozone economy experienced moderate expansion in the past year and proved itself to be resilient to the global headwind. Gross domestic product (GDP) rose by 1.5 per cent in 2015 according to forecasts, thereby showing accelerated growth as compared with the previous year. European consumers have regained their confidence following the euro crisis of 2011/2012, resulting in an expansion of private consumption which is driving domestic demand in the eurozone, with corporate investments still lagging somewhat behind. Some of the major emerging nations which export raw materials, including Russia and Brazil, suffered from the rapid decline in the oil price last year; at the same time it had an overwhelmingly positive price effect on the eurozone. The fall in demand from China also caused uncertainty on the global financial markets. The unemployment rate fell slightly in the entire eurozone. However, this should not hide the fact that the unemployment rate remained very high in 2015 at 10.9 per cent, and the labour markets remain under strain in many countries in Western and in particular Southern Europe. The seasonally adjusted unemployment rate in Austria rose to 5.7 per cent (Eurostat), corresponding to a 9.1 per cent increase according to the Austrian calculation method. Growth in GDP in Austria also remained below the eurozone average for the second year in a row in 2015 at 0.8 per cent. By contrast the Italian economy experienced a mild recovery with growth in GDP expected at 0.7 per cent, following a recession lasting three years.
Inflation remained below expectations in the eurozone contrary to the growth forecasts, caused not least by the heavy fall in prices for raw materials and energy. The European Central Bank (ECB) relaxed its monetary policy further last year in response to this. The main refinancing rate has been virtually zero since 2014. The ECB has also been implementing some unconventional monetary policy measures since last year, principally in the form of a bond acquisition programme with a value of € 60 billion per month. In December 2015, the bond acquisition programme was extended to March 2017, and the deposit rate was pushed down even farther into the negative range (–0.3 per cent). These measures continued to suppress general capital market yields.
In Central and Eastern Europe (CEE) the business environment remained generally positive thanks to the macroeconomic structural conditions, although the picture was not entirely consistent. Countries in Central Europe (Poland, Slovakia, Czech Republic and Hungary) were characterised by positive developments in the labour markets, with unemployment rates to some extent coming close to the levels before the financial crisis in 2008. Economic growth in the region remained above 3 per cent on average for the second year in a row. Solid domestic demand is driving economic performance, and stable public finances and debt levels are making Central Europe a safe harbour.
Most of the national economies in CEE are benefiting from the fall in the prices for raw materials and energy. By contrast, Russia’s raw-material exporting economy fell into recession in the first half of 2015, and its further development remains heavily dependent on price developments for petroleum on the global markets. The value of the Russian rouble fell heavily against the hard currencies and inflation accelerated over the course of the year, with households forced to accept significant falls in real income. The international economic sanctions against Russia also remained in place. The economic structural conditions in Ukraine were likewise still under strain, although the political and financial situation showed signs of stabilising in the second half of the year. For instance, the Ukrainian government was able to agree on debt relief with its international bond creditors. Real gross domestic product in Ukraine fell by around 10 per cent in 2015 as a result of the slump in the first half of the year. The fall in GDP in Russia is estimated to be around 3.8 per cent.
The negative developments in Russia and Ukraine more or less act as a counterbalance to the solid economic performance in Central Europe and the recovery in Southeastern Europe. Performance in some of the Balkan countries was even better than economic analysts had predicted at the start of last year. GDP in Croatia rose in 2015 for the first time following a six-year recession. Serbia and Bosnia and Herzegovina recovered from the 2014 flood disaster somewhat more quickly than had been originally expected. The South Western Balkan countries (Albania, Macedonia and Montenegro) recorded growth rates which were above the average for the region, supported in part by some major public investment projects.
The economic conditions in most of the core countries in CEE are expected to remain positive with the support of solid macroeconomic structural conditions. The significant fluctuations on the markets for raw materials render the economic conditions in Russia uncertain and make a recovery any time soon more difficult. Economic analysts in Austria expect a boost to the economy for 2016 as a result of the tax reforms that came into force as of 1 January 2016.
