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Crisis Management in Central and Southeastern Europe

Crisis Management in Central and Southeastern Europe. Zoltán Egeresi 24/05/2013. Country groups. EU member countries ( joined 2004) EU members ( joined 2007) or acceding countries (2013) EU candidate countries EU membership aspirants. Pre-crisis situation (2007-2008).

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Crisis Management in Central and Southeastern Europe

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  1. Crisis Management inCentral and Southeastern Europe Zoltán Egeresi 24/05/2013

  2. Country groups • EU membercountries(joined 2004) • EUmembers (joined 2007) or accedingcountries (2013) • EU candidatecountries • EU membershipaspirants

  3. Pre-crisissituation (2007-2008) • Small, openeconomies, exceptPoland • Growingeconomies • Except: Hungary • Increasing FDI inflows • Relativelylowpublicdebt • Except: Albania and Hungary • Relativelybalancedgovernmentbudgets • Higher deficit inAlbania, Hungary and Romania

  4. Impacts of the crisis (after 2008) • Decreasing FDI, domesticconsumption and remittances, reduceddemandforthe export, banking systemdifficulties • The extent of therecession (2009; y-o-y): • More than 5 pp: Croatia, Romania, Bulgaria, Hungary, Slovenia, Montenegro • Less than 5 pp: BiH, CzechRepublic, Macedonia, Serbia, Slovakia • Slowdown, but not recession: Albania, Kosovo, Poland • Secondwave of crisis: eurozonecrisisafter 2010 • Increasingpublicdebt • Increasingbudget deficit

  5. Stabilizationmeasures • Main purpose: enhancingfinancial and laterfiscalstability • Similarmonetarypolicies (baserate) • Eurozonemembers (Slovenia, Slovakia – Montengro, Kosovo) and BiH (fixed baserate) • Accedingcountriesin2004 (HU, PL) and Serbia • ɅɅ-shapedbaserate policy • Other Southeast European countries • Ʌ-shapedbaserate policy • IMF packages • Privatization

  6. Restrictivemeasures • Austerity measurestobalancethebudget(in line with IMF packages) • Typicalfeatures: • Cutting public sector salaries, pensions and social allowances • Increasingretirementageinsomecountries • Taxincrease (VAT) / newtaxes, reducingtaxallowances

  7. Governments: elections and crisis I.

  8. Governments: elections and crisis II.

  9. Political consequences • Relatively stable governments with reelection: Albania, CzechRepublic, Kosovo, Macedonia, Montenegro, Poland • Relatively stable governments failing to be reelected: Bulgaria(?), Croatia, Hungary, Romania, Serbia, Slovenia, Slovakia • Difficultiesingovernmentformation: BiH • Reasons of politicalcrisis: restrictivemeasures, corruption and politicalscandals

  10. Conclusions • The level of integrationinto European financialmarkets and economyinfluencedtheextent of thecrisis • Crisis management policiesbasedonthecombinationof incentiveand restrictivemeasures • Notonlytheseverecrisis, butpoliticalscandals and corruptionalsoaffectedthe life span of eachgovernment

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