Turmoil in financial markets, a contraction in Western Europe, sour investor confidence, and national lockdowns drove Central Europe into a notable contraction throughout 2020. Solid macroeconomic fundamentals, timely government response, and ambitious stimulus packages have softened the severe impact of the crisis on regional economies, paving the way for a notable rebound toward the middle of 2021, despite the reintroduction of strict COVID-19 measures.

A recovery in external demand, labor market improvements, and growth in consumer spending will ensure that the region will see a resilient recovery going forward, presenting new opportunities to businesses across all core customer segments. The pace of the recovery will vary significantly, however, not only among regional economies, but also when it comes to customer sub-segments, necessitating a strong focus on execution and strategic planning for 2021.

Recovery in both external and domestic demand dynamics will ensure a resilient and robust rebound going forward. Recovery in the external environment and domestic demand dynamics will provide a boost to local labor markets, leading to a pro-cyclical recovery starting in the middle of 2021. The pace of the rebound will vary significantly, however, with markets in Southeast Europe experiencing a relatively softer improvement.

Access to the EU’s recovery fund and the beginning of the new EU 2021–2027 fund will fuel public investments. The EUR 750 billion fund that includes a mix of loans and grants will provide the necessary infusion of capital to sustain new public investment projects and ease fiscal pressures on local governments.

Keep reading for our country-specific analysis of our expectations for economic recovery in 2021. Don’t see your critical markets? Start your free trial of FrontierView for access to our full suite of research, data, and insights.


Following a pronounced contraction of 3.1% YOY in 2020, the market will see a resilient rebound of 4.1% YOY in 2021, as resilient domestic consumption and higher external demand provide a boost to domestic industries and fuel a gradual improvement in the domestic market. Strong EU recovery funding and higher private investments should ensure a resilient pace of recovery. Monitor policy and budgetary plans to anticipate changes that can severely affect both you and your customers.


Hungary has been one of the most affected markets in Central Europe in 2020, with GDP contracting by 5.5% YOY due to its strong reliance on exports and automotive and components manufacturing. The contraction will be followed by an elevated rebound of 4.3% YOY in 2021, but the recovery will remain precarious, and risks continue to be tilted to the downside. Assess the possibility of taking advantage of existing and planned investment incentives if you are considering localization.

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