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November 9, 2018 www.intellinews.com I Page 6
“We are sceptical that the required reforms needed to save the eurozone from another crisis will come, and if they don’t we think another crisis is pretty likely. This would be very bad news for our region because our region’s trade, investment, remittances are very dependent on the eurozone, and lot of [the region] is in the eurozone.”
Among the other risks to the region’s prosperity are the trade war that to some extent has already started between the US and China. This comes on top of a stalling if not a slight reversal of globalisation seen over the last 10 years, and
is bad news for the open economies of the CEE region in particular.
In addition, China has become such an important source of investment in the region, especially in
the Western Balkans that lack other sources of finance for infrastructure projects, that “if the Chinese economy suffers because of US trade policy that is also very bad news for our region,” Grieveson told the webinar.
On a more positive note, wiiw says that overheat- ing concerns — previously voiced particularly about Turkey and Romania — have subsided since the spring. “However, the tightness of labour markets, rising property prices and negative real interest rates are potential sources of risk,” the report adds.
Yet there are some positive aspects to the outlook. The CESEE region could benefit significantly if the current squeeze in labour markets especially in CEE force firms to invest into raising productivity.
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