The Vienna Institute Monthly Report 1999/11
SUMMARIES

Bulgaria: Widening external imbalances
Economic activity in the country remains subdued, especially in the manufacturing sector. In the first half of 1999 GDP grew by a marginal 0.5% year-on-year, gross industrial output declined by more than 13%. The most worrying recent development has been the wide opening of external imbalances: the current account deficit for the first six months came close to 10% of GDP (in annual terms). The financing of this deficit does not appear to be a problem in the short run; however, the current trends of economic performance – combining low level of economic activity with dangerously widening external gaps – are not sustainable in the medium term and at some point may require a policy correction.
 

Croatia: Election year overshadowed by poor economic performance
Croatia's economy shows a gloomy picture in the election year. Resulting from shrinking foreign and domestic demand, GDP has been on the decline for three quarters in a row. Foreign debt reached new heights with an increasing share of short-term debt. Price and exchange rate stability could be maintained thanks to enhanced interventions of the National Bank. Privatization earnings from the sale of a 35% stake of Croatian Telecom helped to overcome a bottleneck in the budget. After a GDP decline of about 2% in 1999, some slight recovery may follow in 2000.
 

Romania: Restructuring amidst austerity
Tight fiscal and monetary policies have partially cured the basic imbalances in the economy. Loss-making activities have been streamlined so that the country could overcome a severe international payments crisis. The shrinking foreign trade gap and lower energy intensity are signs of a positive trend of restructuring in the Romanian industry. Still, this and most of the coming year, the GDP decline will continue while inflation will still be high.
 
 
 

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