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Post-Crisis Economic Development of the EU and Bulgaria Sofia, 18-19 October 2012

Economic Crisis: The Way Out? An Eastern European Perspective Sándor Meisel – Krisztina Vida Institute for World Economics Research C entre for Economic and Regional Studies of the HAS. Post-Crisis Economic Development of the EU and Bulgaria Sofia, 18-19 October 2012.

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Post-Crisis Economic Development of the EU and Bulgaria Sofia, 18-19 October 2012

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  1. Economic Crisis: The Way Out?An Eastern European PerspectiveSándor Meisel – Krisztina VidaInstitute for World EconomicsResearch Centre for Economic and Regional Studies of the HAS Post-Crisis Economic Development of the EU and Bulgaria Sofia, 18-19 October 2012

  2. Objectives and challenges • Fiscal stabilisation: government deficits government depts • Reform of the systems of redistribution: sustainability • Growth and convergence • Competitiveness

  3. Political conditions • Relative stability • exception: RO • elections: LT and RO • Living standards (GDP/cap) • Employment rates • Unemployment

  4. Slow catching up with differences(GDP/cap, EU27=100%)

  5. Low but slightly improving employment

  6. Relatively high unemployment

  7. Economic conditions • Growth • Investments • FDI • Foreign trade • Current account balance • Inflation • Public finances and reforms

  8. Improving growth expectations?(GDP growth, annual change, %)

  9. Gross fixed capital formation(as % of GDP)

  10. Declining FDI inflow(EUR billion)

  11. Current account balance(as % of GDP)

  12. Lower inflation rates: are they sustainable?

  13. Government deficit: improving trends(as % of GDP)

  14. Public finances: common features of the reforms • Income: • increasing taxes • new taxes • improvements in tax collection • privatisation • Expenditure: • streamlining the public administration • freezing (cutting) the wages in the public sector • reform of the pension and health care system • Reshaping of the social payments • Changes in the level of redistribution between 2008-12: • decreasing level: BG, RO, LT • same level: LV, HU, PL • increasing level: CZ, EE, SK, SI

  15. Growing public dept(as % of GDP)

  16. Competiveness • Labour productivity per person employed • Real unit labour cost • Innovation ranking

  17. Labour productivity per person: slow improvements

  18. Real unit labour cost: favourable trends from the point of view of competition, but slow catching up of wages

  19. Innovation performance

  20. Conclusions • Crisis slowed down catching up • In 2011 recovery, in 2012 more modest trends  better outlook in 2013 • The pre-crisis dynamism is not likely to return • Probably more balanced and sustainable growth path, depending on the external conditions • Public finances on the way of slow consolidation

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