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bne September 2018 Central Europe I 39
this quarter. Czechia’s economic growth decelerated to 2.3% year-on-year
in the second quarter of 2018 from 4.2% growth in the first quarter as the economy runs up against its struc-
tural limits, the Czech Statistics Office (CSU) said on August 14. The main reason is a strong base effect from the previous year, but the slowdown was also due to the depleted capacities of the Czech economy, analysts say. Slovakia’s economy grew 4.1%, compared with 3.6% in the first quarter.
peration to find more labour has opened a bureau to fast-track work permits for Ukrainian jobseekers and bne Intel- liNews’s correspondent in Tbilisi reports the capital of Georgia is plastered with posters advertising jobs in Poland.
The labour issue is becoming a major drag on further growth and driving up wages. Six countries in Central and East- ern Europe have acute labour shortages, according to a report of Colliers Inter- national. Bulgaria, Romania, Hungary,
statistical office announced on August 9. The Polish unemployment rate came in at 5.9% in July, a drop of 1.1pp y/y, the labour ministry said in a preliminary estimate released on August 6. And the July unemployment rate is the lowest since November 1990, shortly before it ballooned to double-digit levels after the implementation of market reforms.
Polish wages grew 7.1% y/y in the second quarter, resulting in an average gross monthly pay packet of PLN4,521.1 (€1,058), according to data released
by statistics office GUS on August 9. Growth in wages continues in Poland, as an effect of the shortage of labour that persists despite companies resorting to employing cheaper labourers from Ukraine on a massive scale.
The labour shortage in CEE has been
a boon to Ukraine, which has the lowest wages in Europe – the average wage in Poland is currently four-times more than the official average in Ukraine. Over the last three years there has been an exodus by able bodied Ukrainians looking for work. Some 400,000 Ukrainians have left the country in the last year to find employment in their neighbours and
are sending some $10bn of remittances home a year.
The Czech labour market is overheated, which is causing inflationary pressures due to robust wage growth, the central bank board concluded during a June 27 meeting at which it raised the key interest rate by a quarter point to 1%. The Czech
“Six economies in Central and Eastern Europe released second quarter GDP data in August and all of the show signs of slowing down”
By contrast Hungarian GDP growth unexpectedly quickened to 4.6%, the fastest pace since 2014, driven by agri- culture, services and manufacturing. But economic research institute GKI said at the end of July economic growth prob- ably reached the peak in this business cycle of 4.4% in the 4Q17 and 1Q18.
Poland’s economy is the biggest in the region and is also holding up well, but growth is also expected to peter out later this year. GDP growth slipped from 5.2% in the first quarter to 5.1% in the second and is expected to slow further as the year wears on, due to weak investment growth as the construction sector reaches capacity limits, among other problems.
Romania’s economy has already passed its peak. After turning in an astonish- ing 8.8% growth in the third quarter of 2017, Romania’s state forecasting body the CNP cut its projection for this year’s GDP growth from to 5.5% in July from 6.1% in the previous outlook released in April. Romania’s GDP increased by 4% y/y in the first quarter of the year, the statistics office said earlier in July, con- firming an earlier flash estimate, pushed up by private consumption.
Labour woes
The main problem is everyone now has a job and these workers can’t be made to work more or better. Poland in its des-
Slovakia, the Czech Republic and Poland have very low levels of unemployment, combined with dynamic growth, emi- gration and the fast development of the service sector. “If the labour force riddle
is not solved, then we foresee limitations to GDP growth, perhaps a recession and a likely shadow over private investment in the region in the medium to long run,” the report noted.
Slovakia is now facing its highest job vacancy rates in a decade. Slovakia’s job vacancy rate in the second quarter of the year stood at 2.6%, the highest since 2008. It went up 0.1pp up compared to the previous quarter as well as 0.4pp up against the same quarter of 2017, the
CEE relative rates of GDP growth
share of total growth rate in period for selected countries
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