Suchergebnisse

Fast economic growth - in excess of 5% per year - continues in most New EU Member States (NMS). Growth in Bulgaria and Romania (which joined the EU on 1 January 2007) was also accelerating throughout 2006. Everywhere, except Hungary, GDP growth has been driven predominantly by domestic demand. External trade, which significantly boosted GDP growth in a number of NMS in 2005, has been losing significance and continues to be a drag on growth in Bulgaria and Romania. wiiw growth forecasts of the GDP in individual NMS in 2007 and 2008 are looking very good. It is expected that household consumption will continue to rise strongly. Rising employment and wages (strengthening under the impact of emerging labour shortages) will be supportive. Rising remittances of migrant workers would be adding to fast rising consumer spending. Gross fixed capital investment is expected to remain strong in most NMS. With the exception of Hungary, fiscal policies will not interfere with real growth. The slight deceleration of growth in the EU-15 expected in 2007 is not likely to restrict the growth of both NMS exports and their overall GDP too much as further gains on industrial unit labour costs are expected. Given the ongoing structural changes and quality improvements in production and exports, the NMS should continue to gain market shares even despite further currency appreciation. However, growth in imports responding to growing domestic demand will be reducing the contribution of trade to GDP growth. This contribution is likely to be negative in the 'old' NMS, but small. In Bulgaria and Romania, the contributions of external trade to growth will be negative and large. Unlike the 'old' NMS, these two countries will be running very high current account deficits and rely on rising private foreign debt in order to finance consumption and investments. The risk of making big errors in growth forecasts for the 'old' NMS is fairly low. Their fundamentals are nowadays much sounder than in the past (Hungary being temporarily an exception). The rates of inflation are quite low and firmly under control. Interest rate differentials vs. the major international currencies are also low, falling, or even negative. Incentives for potentially destabilizing speculative capital inflows (and outflows) are therefore weak. Nominal currency appreciation is likely to continue, signifying the NMS' economic strength rather than potential weakness. The estimates of GDP growth rates for Bulgaria and Romania may be less certain. Both countries are growing turbulently. But, as in the Baltic countries, their growth is to a large extent induced by booming household consumption which is credit-driven and fed by excessive imports. Yet the experience of the Baltic countries indicates that such a type of growth can go on for a very long time. However, there are many examples of such debt-financed expansions coming to a rather sticky end. Thus, it might come as no surprise were the rising debt burden to put a lid on further expansion in Bulgaria and Romania. The Balkan economies continue to grow despite political risks and external shocks. Consumption is the main source of growth, with investments also increasingly contributing. High exports are accompanied by high imports and external balances remain strongly negative. Price and exchange rate stability, however, remain manageable because of strong growth of productivity and downward pressure on wages from excess supply of labour. The expectation of sustained growth is supporting growth of foreign investments in privatized assets but also increasingly in green-field projects. Fast rising prices of assets and declining interest rates due to strong credit expansion are proving worrisome for the central banks, which fear asset bubbles and weaknesses in the banking sector. These challenges are met with a tightening of monetary policy, which has led to some moderation of growth rates. Overall prospects are positive for growth and stability in the short and medium run. The main risks to positive expectations emanate from remaining political problems and from doubts about the process of EU integration and accession. The major political risk is connected with the upcoming decision on the Kosovo status. If that risk is managed well and if other political problems are addressed that will make it possible for all the countries in the region to either sign association agreements with the EU or continue or start negotiations on membership in the EU, rather positive economic news should be coming out steadily from the Balkans. That would also help the region to address the serious social risks, especially those connected with high or very high unemployment. Overall, prospects for growth are good in the short and medium run and prospects for stability are risky in the short run and good in the medium run. The region as a whole should be included in the EU by 2015, except perhaps for Kosovo and Turkey. Russian economic growth was once more over 6% in 2006, the cumulated GDP has increased by more than 40% since 2000. GDP growth is driven by the surging private consumption, recently also by investments. Owing to sluggish exports and booming imports, the contribution of real net exports to GDP growth has been negative already since 2003. The economic outlook remains positive with both consumption and investments (including FDI) growing rapidly. However, wiiw expects growth to settle between 5% and 6% in the coming years. With more oil and gas money as well as power consolidation at home, Russia's self confidence will grow further. In Ukraine, GDP growth accelerated markedly in 2006; macroeconomic imbalances were largely avoided and the 'gas price shock' reasonably well digested. Foreign debt increased by some 25%, reaching 47% of GDP by the end of the year - mainly caused by the banking sector's rapidly growing external borrowing, possibly associated with the growing presence of foreign banks. Inflation apart, the country's short-term economic outlook is good. In 2007 2008 we expect economic growth close to 6%. Despite the persistent stand-off between the president and the prime minister, the country is now living through a period of its greatest political stability since the 'orange revolution'. In China, GDP grew by 10.7%, driven by investment and an exploding trade surplus but supported by private consumption as well. For 2007-08, prospects remain good but a slight deceleration of growth may occur, due to a certain slowing down of investment and measures to contain the trade surplus.

The 1st of May 2007 marked the third anniversary of the accession of the new member states (NMS) to the European Union the economic balance of the first three years is a clear success for the whole EU. Over the period 2001-2003 GDP in the NMS had increased by 3.1% per year on average; over the period 2004-2006, however, it expanded by 5.3% per year – an increase of the annual growth rate by 2.2 percentage points. In part, this growth acceleration is attributable to the more favourable international environment and the distinctly better growth performance in the 'old' EU; nevertheless the NMS substantially increased their lead in terms of growth over the EU-15 up from 1.7 p.p. in 2001-2003 to 3.1 p.p. in 2004-2006. The catching-up process to the level of development of the 'old' EU has thus accelerated. The aggregate figures for the group show that in 2001-2003 the NMS reduced the gap in per capita GDP in relation to the EU average by 2.7 p.p., and the pace of catching up was nearly a third faster, 3.8 p.p., in the post-accession period. In the field of investments the difference between the pre- and post-accession period was even more spectacular while in 2001-2003 both the EU-15 and the NMS recorded an only marginal expansion, in 2004 2006 investment growth in the NMS was 4.7 p.p. higher than in the 'old' EU member states. The NMS also became more attractive targets for FDI. And their export growth rates nearly doubled after EU accession import growth lagged behind export growth, yielding better trade balances. The stronger economic growth reduced unemployment the aggregate unemployment rate in the NMS declined by 1.7 p.p. in the post-accession period. However, three macroeconomic stability indicators – inflation, current account status and fiscal balance – reveal a more differentiated and less favourable picture than those measuring changes in the real economy. Given the expected continuation of the favourable international environment, the period of high growth in the NMS will continue in 2007 and 2008, except for Hungary. Nevertheless, in all but two countries (the Czech Republic and Hungary) growth rates in 2008 will be somewhat lower than, or only as high as, in 2007, thus hinting at constraints on further growth acceleration. Household consumption remains the engine of growth in the Czech Republic, Poland, Bulgaria and Romania, as well as in the Baltic States. Investments will boom in Poland, Slovenia, Bulgaria, Romania and the Baltic States. Supply-side constraints on a very rapid expansion of the economy will be felt in more and more countries of the region, especially in terms of the tight labour market. There are clear signs of overheating in Bulgaria, Romania and the Baltic States where the external balance has been deteriorating and no turnaround is in sight. Only in Slovakia does very high growth seem to be sustainable at least over the next two years. Inflation will remain relatively low. This is the outcome of the contradicting effect of inflationary pressures from an increasingly tight labour market and its consequences, and the considerable appreciation of the national currencies. High export growth will reflect the favourable international environment and the growing import demand of the region's main trading partner countries, as well as the continuing competitiveness of the NMS. Economic developments in the future member states (FMS) of the EU – the candidate and potential candidate countries of the Balkans – continue to surprise positively. All countries report respectable growth rates of their GDPs, and the growth looks sustainable. Industrial production, a weak sector traditionally, grows faster than GDP, except in Montenegro. Tourism – an important sector in the Balkans – is attracting investments, private as well as public. In general, investments are proving to be an important driver of growth, though consumption is still the dominant contributor. In addition, exports are growing rather fast though so are imports too. These positive developments are supported by the belief in the political and policy stability in these countries. Though external and internal imbalances, i.e. in the labor markets, are still quite large, price stability does not seem threatened. Even in countries such as Turkey or Serbia, where exchange rates and prices are more volatile, the risks of serious crisis are rather low. In addition to macroeconomic stability, the underlying political stability seems to have improved as well. Though no breakthrough has been achieved in the longstanding political problems, progress in democratization is bringing the security and political risks down. Though economies are doing better in the FMS, public and corporate governance as well as structural reforms are not necessarily contributing decisively to that. The most commonly used indices of progress in reforms, business climate and public governance, do not give a consistent picture and certainly do not unequivocally report improvement. The prospects of EU integration have improved during the German presidency and will add to the positive outlook. Growth should stay between 5% and 6%, investments and exports should grow even faster and macroeconomic stability should be sustained in the medium run. Russia's economic growth accelerated in 2007, driven by booming consumption and investments (including FDI). More expenditures on state-sponsored priority programmes and industrial policy measures focusing on public-private partnership projects should foster restructuring and innovations. The wiiw forecast reckons with ongoing reliance on energy revenues and an average annual GDP growth of 5.3% in the coming years. With more money and power consolidation at home, Russian self-confidence will grow further – and this may lead to more conflicts with the West. In Ukraine, strong consumer demand, vigorous investment activity and solid exports have all contributed to impressive GDP growth of 7.9% in January-May 2007. Rising consumption and housing construction are increasingly driven by expanding consumer credit, not least due to the growing presence of foreign banks. However, we expect economic growth for the year as a whole to be somewhat lower, between 6.5% and 7%. Imports growing faster than exports will translate into a rising current account deficit, possibly up to 4% of GDP in 2007 and even higher next year. The prospects for greater political stability in the country remain bleak. GDP grew by 11.1% in China in the first quarter of 2007, faster than expected by most experts. Obviously, the official efforts to contain growth have so far not been successful. The economy was driven by a rebound of investment and by a ballooning trade surplus, but supported by a certain acceleration of consumer demand as well. Recent data point to a continuation of the rapid expansion, which may result in a growth rate for the whole year between 10.5% and 11%.

In 2005 most of the new EU member states (NMS) performed even better than in 2004. They have successfully managed the accession to the EU and gained the ability to grow fast despite the anaemic performance of the old EU. FDI inflows reached a record high. In the coming two years, economic prospects for the NMS are fairly good, even if growth in the old EU remains unimpressive and prices of energy stay high. By 2007 higher EU transfers should be allowing for a significant expansion of investment. The positive contribution of net exports to GDP growth is expected to continue in 2006-2007. Besides, rising private consumption and investment should be playing a stronger role than in 2005. With continuing appreciation of the domestic currencies, the exchange-rate adjusted unit labour costs are growing, as yet without adversely affecting exports. This is a sign of success of the ongoing restructuring of the industrial sector. Interestingly, employment, also in industry, rose in 2005 (except in Hungary). Inflation slowed down to very low levels and is no longer a serious problem. Hungary and Slovakia will have to start consolidating their public finances. In both countries the consolidations may be postponed to 2007 for political reasons. In Southeast Europe, growth has on average remained strong, though it has come down in Romania and Serbia. Rising consumption was the main contributor to GDP growth in this region. That was partly the consequence of the increased soundness of the banking system, but also of the improved expectations of growth in the short and medium term. In the next two years growth should continue, though the volatility is still significant and there are also short-term policy measures that could slow down the recovery. An expectation is that significant inflows of foreign investments will start to translate into growing industrial production, which has been lagging behind in the past. Also, employment is still declining, though unemployment rates have stabilized. Exports of goods and services grew strongly throughout the region, while imports expanded even faster in Romania, Bulgaria and Albania. Price stability and fiscal balance have mostly been preserved, except in the case of Serbia, which has seen accelerating inflation, and Romania, where disinflation has been interrupted. The downside to that is a growing concern that credit expansion is threatening the external balance and price stability. Thus, the region is still facing policy challenges and that adds to the volatility rather than sustainability of its growth prospects. Russia's GDP increased by about 6% in 2005. The main driver of growth was rising domestic demand while the contribution of real net exports to GDP growth was again negative. The pace of structural reforms has slowed down substantially and state interventions in the economy are increasing. GDP growth of about 6% is forecast for the coming years, disinflation will be slow. Sustainable and broader-based long-term growth would require more investment and economic restructuring. The slowdown of economic growth in Ukraine has been spectacular, reflecting weak investment demand and the deterioration of foreign trade. By and large, the country's economy remains hostage to the political uncertainty ahead of the parliamentary elections in March 2006. In China, GDP grew by nearly 10% driven by both external and domestic demand. A slight growth deceleration is expected for 2006-2007 as the government intends to slow down investment expansion and as exports of some products to the USA and the EU will be restricted.

The external conditions facing the transition economies slightly improved on balance during the year 2004. The eight new EU member states of Central and Eastern Europe (NMS-8) recorded higher GDP growth (5% on average) than in the previous year, largely thanks to expanding domestic demand - in particular of investment (Czech Republic, Hungary and Latvia) and of private consumption (Poland, Slovakia, Estonia and Lithuania). Growth accelerated also in Southeast Europe (except Croatia and Macedonia), as well as in Belarus and Ukraine (Russia's GDP grew by 7% again). The transition economies have thus been one of the most dynamic regions in the world. The NMS have been growing more than 2 percentage points faster than the 'old' EU-15. These countries not only add a certain dynamism to the European economy but put some pressure on the EU reform agenda as well. On the downside, the situation on the labour market remains precarious, robust economic growth notwithstanding. The average rate of unemployment in the NMS is nearly twice as high as in the EU-15 (mainly on account of Poland and Slovakia); in most of Southeast Europe it is even higher, with little prospect for marked improvements any time soon. The latter refers to industry in particular, which - despite a remarkable acceleration of output growth (10% on NMS average in 2004) - continues to shed labour. This implies impressive gains in labour productivity and, given the general wage restraint, in unit labour costs as well. The improving international costs competitiveness of NMS has recently been eroded by appreciating domestic currencies (Hungary, Poland and Slovakia). After a temporary increase in 2004 (largely caused by tax adjustments prior to EU accession and rising energy prices), inflation resumed its downward trend, reaching low single digits in most NMS (except Slovakia) and in the remaining transition countries as well (except Romania, Serbia and Ukraine). Russian inflation has been stubbornly high, fuelled by large inflows of foreign currency, tariff hikes and galloping producer prices. The remaining inflation differential with respect to the eurozone, magnified by a natural appreciation tendency of NMS currencies (frequently stimulated by short-term capital inflows) may lead to competitiveness losses in the future. Given the ongoing productivity and quality improvements this danger is not imminent in most NMS yet. Still the exchange rate developments should be watched closely, not least in the period prior to EMU accession, which in several NMS will probably extend beyond 2010. The need to reduce excessive budget deficits represents another challenge facing several NMS in the coming years. The outstanding feature of last year's economic developments was a boost in foreign trade (or of intra-EU dispatches and arrivals in the case of NMS). NMS exports jumped by more than 20% in current euro terms, somewhat faster than imports (+18%), yet their aggregate trade balance slightly deteriorated (in fact foreign trade contributed positively to GDP growth in Poland only). Nonetheless, the export sector of NMS is strengthening - not least thanks to sustained reforms and large FDI inflows in the past few years - and their integration in the European and world economy is increasing. Today, 86% of NMS exports and 72% of imports represent intra-EU trade. Given the high (and rising) export surpluses of Russia and Ukraine - in both cases swelled by rising world market commodity prices - the trade contribution to growth has been positive in these countries as well. After the takeover of EU external trade policies upon accession, especially intra-NMS trade (preliminary estimates suggest an increase by 30% in 2004) and extra-EU trade are booming. Altogether, the NMS enjoy a surplus in trade transactions with the EU, an achievement attributable largely to the high and growing surpluses of the Czech Republic, Hungary and Slovakia (and to a lower deficit in Poland); the separate effect of trade with the EU on GDP growth was most likely positive. In Southeast Europe, trade integration is (with few exceptions such as Bulgaria) still rather low and many countries in the region suffer from huge trade and current account deficits which may not be sustainable (particularly in Bosnia and Herzegovina, and Serbia). The EU accession of eight Central and East European countries on 1 May 2004 has brought few surprises and may generally be considered a success. The accession was well prepared and managed. The direct economic effects of accession on the NMS are difficult to identify economic growth, especially of industry, had speeded up already before May 2004, a temporary increase of inflation was soon successfully contained and domestic currencies strengthened. Net transfers from the EU budget were negligible (less than 1% of NMS GDP), yet inflows of FDI picked up in 2004 again - albeit remaining below the peak of 2000-2002. The GDP growth outlook is fairly robust barring major external shocks, the NMS are expected to grow by 4-5% annually in the coming years (the Baltic States will continue to enjoy even somewhat higher growth) thus maintaining their speed of nominal and real convergence to the 'old' EU. Inflation is converging to eurozone levels as well. The shadow side of this fairly upbeat forecast is the labour market where no substantial reduction of unemployment is expected. Estonia, Lithuania and Slovenia (all already participating in the ERM II) may adopt the euro in late 2006 or early 2007, with the remaining 'high-deficit' NMS following suit during 2008-2010. Also the economic outlook for Southeast Europe is more encouraging now than in the recent past GDP growth will accelerate in most countries (without recurring inflation), but unemployment will remain high. As far as the integration prospects of this region are concerned, Bulgaria and Romania will become EU members in 2007, followed by Croatia in 2008 and with Macedonia the next candidate. The coming two years will be crucial also for the remaining countries of the Western Balkans as a number of exceptionally difficult issues will have to be solved (in Bosnia and Herzegovina, Serbia, Montenegro and Kosovo). If everything goes well (and there are a lot of caveats) the whole region could be in the EU around 2015. However, by that time the issue of Turkey's EU membership will have to be finally decided and a possible application of Ukraine (as well as Moldova) for EU membership will have to be dealt with. In addition, the enlarged EU will simultaneously have to clarify its relations with Russia. These challenging developments will doubtlessly require a new (and this time much more radical) reform of the whole system of EU institutions.