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Post-Crisis Economic Development in Eastern Europe: Challenges and Opportunities

This research focuses on the objectives and challenges faced by Eastern European countries in their post-crisis economic development. It analyzes factors such as fiscal stabilization, reform of redistribution systems, growth, competitiveness, and political conditions. The study also examines the impact of economic conditions on employment rates, GDP growth, investments, FDI, foreign trade, inflation, and public finances. The conclusions highlight the need for balanced and sustainable growth, while emphasizing the importance of slow consolidation of public finances.

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Post-Crisis Economic Development in Eastern Europe: Challenges and Opportunities

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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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