Despite the recent escalation in the transatlantic trade conflict under U.S. President Donald Trump, economic growth in Central, Eastern, and Southeastern Europe (CESEE) remains robust for 2025. According to the latest spring forecast from the Vienna Institute for International Economic Studies (wiiw), the region continues to grow significantly faster than the Eurozone. The tariffs imposed by Trump have had little impact on the economies of Central and Eastern Europe so far.
“The direct trade between these countries and the U.S. is small, and the spillover effects via the heavily export-dependent German industry should also remain manageable,” said Richard Grieveson, deputy director of wiiw.
For EU members in Central, Eastern, and Southeastern Europe, the wiiw forecasts average GDP growth of 2.5 percent in 2025, a slight downward revision of 0.3 percentage points compared to the winter forecast. Growth is expected to accelerate to 2.8 percent in 2026. In contrast, the Eurozone is projected to grow by only 0.7 percent in 2025—a 0.5-point downgrade—continuing the economic convergence of Eastern EU states.
Private Consumption Drives Growth
The main drivers of growth are private consumption and strong real wage increases. In Poland, the largest market in the region, the wiiw forecasts GDP growth of 3.5 percent for both 2025 and 2026. Croatia, Slovenia, and several Western Balkan countries are expected to achieve solid growth rates between 3 and 3.6 percent. Turkey is also forecasted to grow dynamically, with 3.5 percent this year and 4 percent next year.
The outlook for Ukraine is more difficult. While the wiiw predicts growth of 3 percent in 2025 and 4 percent in 2026, uncertainty remains high. The country continues to struggle with systematic infrastructure destruction from Russian air attacks and a severe labor shortage due to mobilization and refugee flows. “Trump’s efforts to pressure Ukraine into de facto capitulation and turn it into an economic colony of the U.S. are the biggest threat to its recovery,” said Olga Pindyuk, Ukraine expert at the wiiw.
Russian Growth Forecast Revised Upward
Russia’s economic outlook has improved despite the ongoing war and Western sanctions. The wiiw raised its 2025 growth forecast slightly to 2 percent and expects 2.5 percent growth in 2026, revising the estimate up by 0.9 percentage points. This is linked to Russia’s closer ties with the U.S. and expectations of easing sanctions. A potential ceasefire or peace agreement could end Russia’s economic isolation by the U.S., said Vasily Astrov, Russia expert at the wiiw. Foreign companies like Renault, Hyundai, and Samsung are reportedly considering a return to Russia, with LG already restarting production in Moscow.
The recent fall in oil prices—the country’s main export good—has only a limited effect. Although state revenues are declining, Russia’s budget is less dependent on oil than in the past and could be financed despite a higher deficit.
Eastern Neighbors Support Austria’s Economy
Austria is expected to benefit from growth in its eastern neighbors, particularly Poland, the Czech Republic, Hungary, and Slovenia, which could help offset the weakness of Germany’s economy. Without strong growth in Eastern Europe, Austria’s economic situation would be even more difficult, the report states.
However, risks remain, including new trade barriers from the U.S., ongoing geopolitical tensions, prolonged war in Ukraine, and a potential slowdown in EU funding. Nevertheless, the region’s resilience is higher than during previous crises, Grieveson emphasized.
