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Welcome to the webinar:

Welcome to the webinar: Economic outlook improving: The new Forecast for Central, Eastern and Southeastern European Countries July 3rd, 2014 | Vienna, Austria. 1. The Hosts. The Vienna Institute for International Economic Studies:

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Welcome to the webinar:

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  1. Welcome to the webinar: Economic outlook improving: The new Forecast for Central, Eastern and Southeastern European Countries July 3rd, 2014 | Vienna, Austria 1

  2. The Hosts The Vienna Institute for International Economic Studies: The Vienna Institute for International Economic Studies – wiiw – is one of the principle centres for research on Central, East and Southeast Europe with 40 years of experience. At present, its thematic work is focused on macroeconomic developments andstructuralchange, international economics, labourmarketsand social issues, as well as on selected issues related to sectoral and regional economic developments. wiiw is an independent, non-profit institution. The experts serve the public and clients alike, delivering economic analyses and research, forecasts, statistical data and policy advice. 21st Austria: Leading Austrian companies together with the Austrian Central Bank and the Vienna Stock Exchange took the initiative to start a dialogue on economic growth in Europe as well as current challenges, with a special focus on Austria and the CEE region. It is a unique effort to explain the current basis of the country’s global competitive position and to share learnings and ideas for the future. The members of 21st Austria comprise more than 50% of the market capitalization at the Vienna Stock Exchange and have a leading market position in numerous CESEE countries in their respective sectors.

  3. Speaker: Mario Holzner Mario Holzner isDeputyDirectorandeconomistattheVienna Institute for International Economic Studies (wiiw). His researchfocuses on macroeconomicanalysis, financialissues, infrastructure, andtheeconomiesofSoutheast Europe. Mario Holzner received a doctorate in economicsfromthe Vienna University of Economics and Business Administration.

  4. CESEE GDP growth weak but on the rise Development of quarterly GDP, real change in % against preceding year Remark: Highlighted lines represent top 3 and bottom 3 countries referring to growth of 1st quarter 2014.Source: National and Eurostat statistics.

  5. Deflationary pressures have built up Consumer prices, change in % against preceding year Source: wiiw Monthly Database incorporating national and Eurostat statistics.

  6. Public and private GFCF growth in 15 CESEE countries, before the crisis outbreak (2000-2008): no relationship Source: National and Eurostat statistics, own calculations.

  7. Public and private GFCF growth in 15 CESEE countries, after the crisis outbreak (2009-2012): positive correlation Source: National and Eurostat statistics, own calculation.

  8. (Public) Investment leads the way out of the slump Motorways, thermal and nuclear power plant projects in the pipeline Intensive use of the remaining disbursement period 2014-2015 of the EU MFF 2007-2013 & national co-financing More public capital investment has the potential to spur subsequent private investment Improving growth prospects in the euro area are likely to encourage CESEE export industries’ investment activity

  9. Confidence in the economy on the rise CESEE gross industrial production change in % against preceding year / industrial confidence indicator in pp. Remark: Average over available countries. Source: wiiw Monthly Database incorporating national and Eurostat statistics for industrial production.Eurostat and national statistics for industrial confidence.

  10. Investment activity: so far mild recovery Gross fixedcapitalformation, real change in % againstprecedingyear, seasonally adjusted and adjusted data by working days Remark: Highlighted lines represent top 3 and bottom 3 countries referring to growth of 1st quarter 2014.Source: National and Eurostat statistics.

  11. Investment activity: levelsremainbelow 2007 (except PL) Gross fixedcapitalformation, 4Q 2008 =100, seasonally adjusted and adjusted data by working days Source: Eurostat, wiiwcalculations.

  12. Constructionsector: differentiatedrecoveryfromslump Construction, change in % againstprecedingyear, seasonally adjusted and adjusted data by working days Remark: Highlighted lines represent top 3 and bottom 3 countries referring to growth of 1st quarter 2014.Source: National and Eurostat statistics.

  13. Constructionsector: levelsremainmostlybelow 2007 Construction, 4Q 2008 = 100, seasonally adjusted and adjusted data by working days Source: Eurostat, wiiwcalculations.

  14. Investment to spur 2014 GDP growth in most of core CESEE GDP growth in 2013 & 2014 in % and contribution of individual demand components in percentage points, weak 2013 household consumption countries ‚’13 | ‘14 Remark: Ordered by 2014 growth rates. Bosnia & Herzegovina based on GDP expenditure.Source: For 2013 wiiw and national statistics as of July 2014. Forecast 2014 by wiiw.

  15. Growth drivers differentiated in crisis and peripheral CESEE GDP growth in 2013 & 2014 in % and contribution of individual demand components in percentage points, dynamic 2013 household consumption countries ‚’13 | ‘14 Remark: Ordered by 2014 growth rates. Ukraine: GDP growth rate including Crimea and Sevastopol.Source: For 2013 wiiw and national statistics as of July 2014. Forecast 2014 by wiiw.

  16. Financing of private investment is a problem where deleveraging continues (and NPLs are high) Indices of foreign bank claims of Western European banks to CEE on ultimate risk basis, January 2008 = 100 Source: BIS.

  17. Youth unemployment rate for age group 15-24, in %, 1q 2014 Note: FR, IS, MK, PL, RO, TR: 1q 2013.Source: wiiw calculation incorporating national and Eurostat statistics.

  18. Summary Upward reversal of EU supported public infrastructure investment has potential to spur private euro area growth likely to encourage export industries’ investments CESEE GDP growth to pick up speed and amount to 2-3% annually on average in 2014-2016 Ukraine-Russia conflict negatively affects growth prospects also in the Baltics (average 2014 forecast revision since March: -1.8%) Floods and fiscal austerity dampen growth forecast for Western Balkans (average 2014 forecast revision since March: -0.5%) Core CESEE economies with improved growth expectations as indeed investment activity is even stronger than expected (average 2014 forecast revision since March: +0.6%)

  19. GDP growth, current wiiw forecast for 2014-2016 2014 2015 2016 Kosovo 5.0 4.0 4.0 Romania 3.2 3.0 3.3 Poland 3.0 3.2 3.1 Lithuania 2.9 3.1 3.2 Turkey 2.9 3.5 4.5 Macedonia 2.8 2.9 3.0 Latvia 2.7 2.9 3.1 Hungary 2.6 2.2 2.1 Slovakia 2.4 3.0 3.2 Montenegro 2.1 2.9 3.0 2014 2015 2016 Czech Republic 1.7 2.4 3.0 Bulgaria 1.4 2.1 2.5 Albania 1.3 1.5 0.9 Estonia 0.7 1.8 2.4 Russia 0.6 1.6 2.3 Slovenia 0.5 1.4 1.7 BosniaandHerzegovina 0.0 1.5 3.0 Croatia-0.5 0.7 1.5 Serbia-1.0 0.0 1.0 Ukraine -5.0 0.0 1.8 Remark: Ukraine:GDP growth rate up to 2014 including Crimea and Sevastopol.Source: wiiwforecast, July 2014.

  20. If you want to learn more about 21st Austria, please, contact: Marc Lemcke | New YorkE: ml@juleholding.comT: +1 917 385 4299Gerry Elias | LondonE: gerry.elias@bric-ventures.comT: +44 78 79 66 61 66 Verena Nowotny | ViennaE: verena.nowotny@gaisberg.euT: +43 1 5227804 www.21st-austria.at

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