CEE region

According to international forecasts, positive development is to be expected in Central and Eastern Europe this year. Almost all VIG markets can expect to see economic development at least remain stable or even grow. The forecasts for Romania are particularly positive for 2016 according to the Vienna Institute for International Economics (WIIW) which is anticipating GDP growth of 4.0%. Growth will remain solid in Poland also, at 3.4%. Particular growth is expected in the Baltic States. Economic growth in Estonia should rise by a percentage point to 2.2%. Both Latvia and Lithuania are expected to achieve a level of 3.0% in 2016, with Latvia increasing its growth by 0.3 percentage points in comparison with the previous year and Lithuania by 1.4 percentage points. The Czech Republic is expected to see growth of 2.4%, which is a very solid value for an economy that is already very well developed. Hungary expects economic growth in 2016 of 2.2%. A decline in GDP growth to 2.0% is forecasted in Slovenia for 2016.

The expiry of EU subsidy programmes from which Hungary in particular has been benefiting massively during the last phase will have the effect of slowing down growth. In the Czech Republic, the slow recovery in Germany and a restrictive fiscal policy will have a detrimental effect. In Slovenia the recovery is progressing slowly mainly because it is driven by private consumption. The trend remains positive, however. This applies to most countries in the West Balkan region also. In 2016, their overall growth remains at a moderate level but the development nevertheless tends towards solid growth.

It is difficult to estimate what the effect of the migration crisis on the CEE countries will be. The greater availability of additional workers is having a positive effect, as are the immediate expansive measures that governments are taking in response to the crisis. On the other hand, there will be medium to long-term negative effects of difficulties in integration into employment markets, as well as increased budget deficits.

Developments during 2015 made it possible to expect a certain amount of stabilisation in Greece in 2016. The unity of the European Union, however, is still repeatedly being questioned. It appears at the moment, however, that it will not be necessary for Greece to leave the EU and that there will be no dismantling of the Union. But this apparently stable state is not certain in the long-term.

It is expected that oil prices will continue to remain low, which will support global demand. One of the major challenges over the coming months and years will probably be a global switch to sustainable energies, as well as the cohesion or restructuring of the European Union. Both of these, however, also represent enormous economic and political potential.

In the insurance industry, the major challenges will remain the low interest rate environment and the severe price competition in particular in the area of motor insurance.