| The Vienna Institute for International Economic Studies - WIIW |
Southeast European prospects in view of the recent political
developments
The current crisis in Macedonia will have grave economic consequences
for that country, though the immediate negative consequences for the Southeast
European region will be somewhat limited. If the crisis deteriorates and
the conflict slips into a full-blown civil war, the impact on the region
will be much more adverse. However, the possible contagion effects may
prove to be quite significant even if the crisis is resolved quickly, depending
on how it is resolved. The existing political problems in Yugoslavia, Kosovo
and Bosnia and Herzegovina may be aggravated while new ones may very well
emerge. Because of the current political developments, the short-term economic
consequences are not very encouraging while medium- and long-term prospects
will suffer significantly if potential crisis points are not put under
control.
Sector profile: Leather and leather products in the CEECs
In Central and Eastern Europe, as in most other economies, the leather
and leather products sector is only a small part of manufacturing, both
in terms of production and employment. It was hit hard during transition
and became a major loser of the transition process. In general, the leather
and leather products sector in the CEECs showed an above-average export
orientation but a deteriorating trade performance over time. Outward processing
took the place of foreign direct investment inflow. The immediate future
prospects of the leather and leather products sector are rather unfavourable
and the sector will have to cope with further problems in the future.
Nominal wage growth, exchange rate and productivity
Despite gradual disinflation, inflation in CEECs will be substantially
higher than in the EU. Adjustments in exchange rates may be necessary.
Large improvements in labour productivity which can offset, at least partially,
undue real appreciation must be squared with well-balanced wage policies.