| The Vienna Institute for International Economic Studies - WIIW |
The banking sectors in the Baltic countries are at a different
stage of development. All three states experienced a banking crisis. The
fallout of it is still felt in Latvia and Lithuania, where it hit 1995
and 1996, respectively. Estonia experienced the crisis already in 1992
and overcame its consequences long ago. The banking crises led to a considerable
consolidation of the Baltic banking sectors, but this process has not ended
yet. Commercial banks will continue to merge and start expanding abroad
in order to reap economies of scale.
Moldova: A country profile
Moldova is a small and vulnerable country at the western edge of the
former Soviet Union. Its territorial integrity is not settled, as the territories
east of the Nistr river have declared independence from the central government.
Economic policy depends mainly on the conditions of IMF and World Bank
assistance. Due to this support, institutional and legal change, monetary
stabilization and fiscal restructuring has made great progress, but production
keeps declining.
Poland's new government: no change of policies yet
As the Polish economy is enjoying vigorous growth, the new government
appears reluctant to institute radical changes in economic policies.
Recent trends in industrial output and labour costs in transition countries
A spectacular recovery of industrial output has been underway in Hungary, since the beginning of 1996, and especially in Poland, for several years already, where annual production growth rates have recently been close to, or even exceeding, 10%. This contrasts sharply with the near-stagnation of industrial output in Slovenia, and with its decline at the beginning of 1997 in the Czech Republic, respectively. Recent (1997) setbacks are evident also in Bulgaria and Romania, while the Russian industry is finally slowly emerging from its protracted slump.
An overview of wage developments shows an upward trend of dollar wages in most CEECs. Another salient feature of East European wages is the huge gap between Slovenia (and Croatia) on the one hand, and the remaining CEECs on the other hand; within the latter group the wage differences have narrowed. Industrial workers in the more advanced CEECs now earn between USD 300 per month gross (Slovakia) and USD 350 (Poland) - less than half the Slovenian level in mid-1997. The Russian, but especially the Romanian and Bulgarian wage levels are much lower.
Relating dollar wage growth to productivity changes yields a rough assessment of movements in unit labour costs (ULCs) and thus of CEECs' international competitiveness. It is clearly visible how the Hungarian position has been steadily improving, but remarkable cost reductions occurred in the course of 1997 also in Poland and in the Czech Republic. In contrast, Slovak industrial ULCs were roughly 50% higher in mid-1997 than at the beginning of 1993, in Slovenia roughly the same - though starting from an initially much higher level. Despite some improvement since late 1995, Croatian ULCs more than doubled by the end of 1997 as compared with the beginning of 1993, Romanian ULCs remained more or less stable, whereas the estimated ULCs in Bulgaria dropped by about one half.