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eted. Czech-based real estate develop-
er JRD says it has already sold as many apartments in the first nine months of this year as it did in all of 2016. It expects sales to top CZK500mn (€19.4mn) at
the end of year before rising to CZK1bn (€38mn) in 2018. Indeed, real estate prices are growing so fast that some locals complain they are being priced out of their own market and can’t afford housing in the big cities any more.
Hungary's construction sector is also growing at a frantic pace fuelled by government subsidies for residential buyers and reduced VAT for builders. Hungary’s construction sector output expanded by 36.8% in August to an eight-year high, according to statistics office (KSH). Growth is evenly split between private investors and the state. All-in-all the construction of buildings in Hungary was 46.8% higher y/y, and the construction of other objects, mainly infrastructural investments expanded by 24.1%, driven by EU funded railway and road construction projects.
Export growth
One of the most notable manifestations of the CEE boom is in export growth, where the regional leaders – Bulgaria, the Czech Republic, Hungary, and the Slovakia – are enjoying export growth that is faster than China, according to the World Bank (see box).
Indeed, export is driving growth in almost all the countries of CEE, but even in the laggards of Eastern Europe, where there is also growth albeit muted, exports to China are flourishing. Russia saw its exports to China grow by 22%
to 61% in the first nine months of this year, on course to hit this year’s target of $80bn by the end of the year.
Russia’s booming exports to China are clearly a function of its “pivot to the east.” As the rising CEE exports show, they are also a function of a deeper structural change in global trade where Asia is already playing a larger role. By 2020 Russia hopes to see trade turnover with China top $200bn, overtaking trade with the EU that has already fallen from €330bn in 2014 to €228 in 2016 and is likely to fall further.
CEE export growth outstrips China’s
bne intellinews
Export growth in several EU member states from the Central and Eastern Europe region outstripped growth in China both before and after the recent global economic crisis, the World Bank’s latest Europe and Central Asia Economic Update shows.
Romania was the region’s leader in export growth in the six years after the crisis, with annual export growth averaging 9% in Southeast Europe’s largest economy. At an average of 7% per year, export growth in Lithuania, Poland, and Slovakia also outstripped China’s average rate of 4%.
Bulgaria, Czechia, Estonia, Hungary, Latvia and Slovenia also saw faster post-crisis export growth than the East Asian superpower.
“The export success of Central European countries has been remarkable over an even longer period. It compares favourably with export performance in China,” says the World Bank report. “The unweighted annual average of the growth of exports of goods and services (in volume terms) of EU accession countries was 11% in the six years before the global financial crisis, compared with 12% for China. Four countries – Bulgaria, the Czech Republic, Hungary, and the Slovak Republic – registered stronger growth than China.”
This is part of a wider picture showing that the Europe and Central Asia (ECA) region is “outperforming the rest of the world in exports,” according to the bank.
“These numbers are important for two reasons. First, global export growth is now faster than any year since 2010, when exports rebounded from the unprecedented collapse in 2009. Second, ECA’s exports are outperforming exports from other parts of the world,” says the report.
“ECA’s export performance over the last three years is even more striking, with average annual growth of 5.2%, compared with 1.6% export growth in the rest of the world,” it adds, partly attributing this development to
the weakening of the euro following the start of quantitative easing by the European Central Bank in January 2015.
Even Russia is now getting into the non-oil export game, after the steep devaluation of the ruble in 2015 meant the cost of Russian labour is now less than that of China and most of the CEE countries.
Russian car exports will soar by nearly 50% to about 100,000 units in 2017, while by 2025, the figure could reach as much as 190,000 to 200,000 units, according to the Russian Export Centre (REC) "Car exports are rising because the domestic market is small, so the manufacturers are diversifying their operations,” REC's managing director Nikita Gusakov said in a recent interview. Still, Russian car exports at a very early stage and most are still targeted at other Eurasia Economic Union (EEU) countries as Central Europe remains a closed market for Russia.
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