The present economic crisis bears all the familiar hallmarks of the financial, debt-related and structural aspects of current account crises. All these aspects have lasting level effects and recovery can be very protracted. Export-led growth was an important feature of the recovery period 2010-2011, yet significant inter-country differences persisted. A few countries with severe pre-crisis imbalances (Romania, Bulgaria and the Baltic states) enjoyed reasonable export growth over that period, while other structurally weak economies on the European periphery (Western Balkan countries and the Southern EU) fared badly in that respect. The latter group of countries will continue to lag behind also in the forecast period 2012-2014, while some of the Central European economies (Czech Republic, Poland and Slovakia) will manage to stay out of the vicious circle of low growth, high interest rates and unsustainable debt. These three countries, as well as the Baltic states, are expected to grow by about 3% in the years to come (still significantly below the trend growth rates before the crisis). The remaining EU new member states as well as the Western Balkan countries will achieve only about half of this growth. Turkey, Russia, Ukraine and Kazakhstan will grow by rates of up to 5%....more

The growth of Turkey's economy was over 10% year-on-year in some quarters of the period 2010-2011. It may have decelerated recently, but it is not yet certain that this will lead to a more or less soft type of ‘landing’; a swift resumption of growth is feasible. In 2011, thanks to high real growth and a rate of inflation between 5% and 10%, growing budget revenues offered a nice opportunity to increase expenditures and decrease the budget deficit at the same time. This 'pro-active' fiscal policy will continue. The central bank, too, supports GDP expansion by keeping the policy rate low. However, this job is a bit tricky. The rate of inflation should not climb over 10%, and the exchange rate should remain rather stable. The high deficit in the current account is a main source of vulnerability. In the case of no major adverse external shock, growth is likely to accelerate again in 2013-2014....more

Albania: candidate? not yet (by Mario Holzner; pp. 1-3) Keywords: economic forecasts, GDP growth, inflation Countries covered: Albania Topics: Macroeconomic Analysis and Policy Bosnia and Herzegovina: slow motion mode perpetuating (by Josef Pöschl; pp. 4-6) Keywords: economic forecasts, GDP growth, inflation Countries covered: Bosnia and Herzegovina Topics: Macroeconomic Analysis and Policy Croatia: recovery delayed (by Hermine Vidovic; pp. 7-9) Keywords: economic forecasts, GDP growth, inflation Countries covered: Croatia Topics: Macroeconomic Analysis and Policy K...more

Import intensities of production in the New EU Member States in 1995 and 2006 (by Leon Podkaminer; pp. 1-5) Keywords: import intensity, trade, input-output Countries covered: New EU Member States, China, Turkey, Japan, Russia, USA Topics: International Trade, Competitiveness and FDI A note on social indicators for MENA and transition countries (by Mario Holzner; pp. 6 7) Keywords: unemployment, inequality, migration Countries covered: Middle East and North Africa Topics: Labour, Migration and Income Distribution Three crises (by Vladimir Gligorov; pp. 8-10) Keywords: debt crisis...more

For 2011 the wiiw central scenario envisages further improvements in the economic performance of those countries that were still stagnating or contracting in 2010 (Bulgaria, Latvia, Romania, Croatia, Macedonia and Montenegro). However, in those countries that performed reasonably well in 2010 (such as Poland and Slovakia), growth will not accelerate all that much. At a later juncture GDP growth rates will stabilize throughout the region, but they will not return to the levels recorded prior to 2007. The relatively rapid growth in terms of the global output expected in 2011 will not of necessit...more

In Turkey, record GDP growth, 8.9% in 2010 and 11% in the first quarter of 2011, heightened the country’s attractiveness to international investors. Nonetheless, that rapid growth, coming as it does in tandem with a trade deficit that expanded rapidly and has become alarmingly high, has triggered fears of the bubble bursting all of a sudden. The central bank has not responded by increasing interest rates, but has chosen to impose higher reserve requirements on commercial banks. Signs of growth deceleration have already become visible in the course of the current year; however, the extent to which this can be attributed to monetary policy is still unclear. Fiscal policy may also become more restrictive, with the ruling party having secured a landslide victory in the elections. The forecast hints at the possibility of the boom gradually cooling down....more

(Reprint from: WIFO-Monatsberichte, Vol. 84, No. 5, May 2011) Zusammenfassung Das Wirtschaftswachstum belebt sich in den mittel- und osteuropäischen Ländern (MOEL) langsam, bleibt jedoch schwächer als vor der Wirtschaftskrise. Einige der kleinen, offenen Volkswirtschaften der Region wahrten durch Abwertung oder auch Produktivitätssteigerung ihre preisliche Wettbewerbsfähigkeit. Der überwiegend starke Exportaufschwung trug zur Erholung der Industrieproduktion bei. Aufgrund der dynamischen Ausfuhrentwicklung und der Schwäche der Inlandsnachfrage verringerten sich die Leistungsbilanzdefizite ...more

The outlook for the world economy has improved in the course of 2010 and the recovery has gained strength in the EU as well. The Central, East and Southeast European countries (CESEE) have also recovered from the crisis; the majority of them recorded positive GDP growth. On average, the recent revival of exports has been even stronger than their growth before the crisis. By way of contrast, the trends in industrial output have so far remained more or less flat. The persistent decline in construction and fixed investments – both related to the still hesitant credit markets – represents one of t...more

Economic performance in Turkey has been impressive, as evidenced by the GDP growth rate over the past year. Should things continue at this speed, continued high import growth will fuel fears of overheating. Even now the current account deficit is higher than ever before; it is predominantly funded by short-term capital inflows. The central bank is alert to the risk and has responded with a low policy rate in tandem with increases in reserve requirements. Fiscal support for this policy would be helpful, but moderation in terms of expenditures is not a popular topic in the lead-up to the general elections in June 2011. The government is thinking more in terms of boosting revenue via a privatization campaign (mainly related to the energy sector)....more

This report tracks the major geo-economic and geo-strategic ruptures between the EU and Russia on the future patterns of gas supplies and shipping routes to the EU and the Western Balkans. It identifies the objectives and interests of the actors involved in this struggle: Russia, the EU, various EU members, the countries of the Caspian Basin (Kazakhstan, Uzbekistan, Turkmenistan, Azerbaijan) and the Middle East (Iran, Iraq, Qatar, Egypt) as well as the Maghreb countries (Algeria, Libya). It analyses in great detail the colliding interests of all actors at the intersection of business and (...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled New Divide(s) in Europe?, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. The present economic crisis bears all the familiar hallmarks of the financial, debt-related and structural aspects of current account crises. All these aspects have lasting level effects and recovery can be very protracted. Export-led growth was an important feature of the recovery period 2010-2011, yet signi...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery: Limp and Battered, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. In 2011 the recovery will encompass all countries in the CESEE region – even the laggards that did not grow in 2010. However GDP growth will not accelerate much in countries where the recession ended already in 2010. Later on, GDP growth rates will stabilize throughout the whole region at around 4 to 5 pe...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery: Limp and Battered, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. In 2011 the recovery will encompass all countries in the CESEE region – even the laggards that did not grow in 2010. However GDP growth will not accelerate much in countries where the recession ended already in 2010. Later on, GDP growth rates will stabilize throughout the whole region at around 4 to 5 pe...more

In einem speziellen Kapitel („Debt dynamics, flow of funds and deleveraging“) des Konjunkturberichtes "Recovery: Limp and Battered" wird die Verschuldungsdynamik nach Sektoren (Haushalte, Unternehmen, Staat) vor und nach dem Ausbruch der Finanzkrise untersucht und mit den GIPS-Ländern (Griechenland, Irland, Portugal, Spanien) verglichen. Die Last der privaten Verschuldung hat wichtige Konsequenzen für das Ausgaben- und Sparverhalten des Haushalts- und Unternehmenssektors und damit für die Entwicklung der Inlandsnachfrage (Konsum und Investitionen). Dabei zeigen sich sehr unterschiedliche Muste...more

In a special chapter ("Debt dynamics, flow of funds and deleveraging") of the wiiw Forecast "Recovery: Limp and Battered", the debt developments of the private (households, corporate) and public sectors before and after the start of the financial crisis are examined and compared with those in the GIPS countries (Greece, Ireland, Portugal, Spain). The burden of the build-up of private sector debt before the crisis has important consequences for spending and savings behaviour of households and enterprises and hence for the development of domestic demand (consumption and investment). In this resp...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery – in Low Gear across Tough Terrain, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. All Central, East and Southeast European (CESEE) countries will return to growth in 2011. The post-crisis GDP growth will be slower than before and not suffice to generate additional jobs. The role of external demand gradually weakens, while both household consumption and gross fixed inves...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Will exports prevail over austerity?, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe, and China The Central, East and Southeast European (CESEE) economies will experience on average a minor rebound of economic growth to 1% in 2010 which will speed up to 2.5% in 2011 and 3.5% in 2012. GDP growth will be higher in the CIS countries and in Turkey, about average in the Central European N...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Crisis Is Over, but Problems Loom Ahead, analyses recent economic developments and short- and medium-term prospects of the countries of Central and Eastern Europe, Southeast Europe including Turkey, as well as Kazakhstan, Russia, Ukraine and China. Most countries in Central, East and Southeast Europe have emerged from the trough of the crisis already at the end of 2009. Several leading indicators point to a modest upswing. All countries in the regio...more