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bne June 2017 New Europe in Numbers I 55
CEE economies started 2017 with a bang
wiiw
Almost all of the Central Europe region has started 2017 with a bang, with a raft of countries putting in strong growth in the first quarter of this year, Vienna Institute for International Economic Research (WIIW) reports.
“Growth has strengthened almost everywhere, and in some places is at or close to multi-year highs. Positive internal dynamics and strong momentum in Germany suggest it will continue,” WIIW said in a report.
Data released by Eurostat on 16th May showed that most economies in Central and East Europe grew strongly in the first quarter of 2017, as bne IntelliNews has been reporting on its data page. In seasonally adjusted terms, quarter-on- quarter growth was at or over 1% – a very strong rate in the post-crisis context – in the Czech Republic, Poland, Latvia, Lithuania, Hungary and Romania, WIIW reports. And in both Slovakia and Bulgaria, growth was a robust 0.8%.
“In year-on-year terms, growth in all EU/CEE countries for which data were released was at or over 3% in the first quar- ter (except in the Czech Republic, where it was 2.9%). This compared with 1.9% in Austria, 1.7% in Germany, and just 0.8% in France and Italy. The overall rate for the EU28 was 2%,” WIIW says.
It seems that Europe is finally moving out of the crisis that began in 2008 and so far none of the potential growth-killing risks have emerged. WIIW said in another report earlier this year that economic activity would continue to pick up across
EU/CEE this year, thanks to strong domestic labour markets, a pick-up in private investment, and the intensification of the new EU funds cycle. On the downside, there has been little economic fall-out from Brexit for Europe nor has the policy chaos of the incoming Trump administration in the US had much material impact – so far.
On top of this political risks in Europe seem to be reced- ing after rightwing populist candidates failed to win election races in the Netherlands and France and German Chancel- lor Angela Merkel’s CDU just scored a surprise win regional elections.
“In its recent Spring Forecast, the European Commission expected headline EU growth to be 1.9% both this year and the next (both revised up from 1.8% in its previous forecast). And Eurostat data shows quarterly growth picking up to a very positive 0.6% in Germany, which remains a key trad-
ing partner for all EU/CEE countries. Meanwhile, in Austria, which is closely economically integrated with much of EU/ CEE, growth was 0.5%, a high rate compared with most of the period since the outbreak of the global financial crisis. Re- cent releases of high frequency indicators for both countries, such as the purchasing managers’ index, indicate that near- term momentum remains very strong,” WIIW reports. “The first quarter data support the impression that convergence in EU/CEE is back on track. In general, we think that by 2018 growth across EU/CEE will be double the eurozone level, al- lowing for further real per capita income gains relative to the EU average.”
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March 31, 2017 www.intellinews.com
Bulgaria’s kingmaker parties to hold GERB
to ransom
bne IntelliNews
The centre-right Citizens for European Develop- ment of Bulgaria (GERB) might have won the snap parliamentary elections held on March 26, but the party is heading for tough negotiations with possible partners to gain a large enough majority to form a government, and will most likely be forced to make big compromises to stay in power.
Central Europe starts to tot up Brexit fallout
bne IntelliNews
Central European states expressed regret that the UK is leaving the EU as London triggered the Ar- ticle 50 withdrawal clause on March 29. They also quickly moved to start totting up the direct costs.
The economic effects of Brexit on Central Eu- rope are hard to pinpoint given the wide range of
Two smaller groups in the parliament – the na- tionalist United Patriots coalition and the populist Volya (Will) party – have already said they will pre- sent a united front in talks with GERB. They have also indicated they are willing to work with the Bulgarian Socialist Party (BSP), the runner-up in
See page 2
TmhaejoVrispeogwreardsr.egion will be hard hit by the loss of their closest ally amongst the bloc's
potential scenarios under which the UK will exit. However, most suggest the damage will be limited by modest direct trade ties.
In political terms, the Visegrad region will be
See page 3