| The Vienna Institute for International Economic Studies - WIIW |
The growth of GDP has slowed down in 1996 to less than 4% on the CEEC-7
average as a result of the disappointing development of exports, especially
to the European Union. Domestic consumption and investment expand strongly,
except in Hungary and Bulgaria. The Russian and Ukrainian economies continue
to contract. Despite some progress, inflation remains high. Together with
rising labour costs in most countries, this contributes to the deteriorating
competitiveness and to higher trade and current account deficits in the
CEECs. In 1997, the Czech Republic, Poland and Slovakia will grow by about
5%, Hungary should overcome stagnation and Bulgaria its current deep crisis.
In Russia and Ukraine, the protracted economic decline might come to an
end. The above three fast growing CEECs will have to curtail the growth
of their current account deficits.
China: inflation under control, growth slowing down
Inflation is well below the original target of 10% and growth of GDP
is slightly slower than last year. In general, the economic performance
is considered to be in line with the target of a 'soft landing' of the
economy, although some critics consider growth already too slow. However,
in the second half of the year a certain relaxation of the credit policy
can be observed and for 1997 a slight increase in the overall economic
activity is expected. Exports, which went down in the first half of the
year, have recovered in the second half and for the year as a whole the
balance of trade will be in surplus again.
FR Yugoslavia: election crisis
The November local elections, in which the opposition to the ruling
Socialists in Serbia won in the major cities, triggered a political crisis
with possibly far-reaching consequences. With the possible delay of the
lifting of the so-called 'outer wall of sanctions', the foreign trade as
well as banking sector imbalances will aggravate. With the general elections
in Serbia coming up some time in 1997, the economic prospects of Yugoslavia
are less certain than ever.