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27%, 26% and 17% of their 2019 GDP respectively. This means an additional 2.5% to 5% of GDP annually, a number that will be extremely supportive for the mid-term economic outlook.”
He also noted that governments are eager to put the funds to work: “Our conversations with policymakers
in Slovenia and Greece suggest governments will not waste any time
in preparing the projects to be able to draw the majority of funding available.”
“As the funding will be targeting multiple broad infrastructure projects and will be focusing on green transformation and improvements in structural efficiency, we expect sizeable multiplier effects in economic growth for Southeastern Europe,” Umberger added.
Croatia is also set to receive a substantial chunk of EU funds – €683.7mn – to support the rebuild and recovery of the capital Zagreb after the earthquake that struck in March, damaging homes and other buildings and causing an estimated HRK86bn (€11.2bn) worth of damage.
This will be a boon for the country, whose economy is forecast by most international financial institutions to shrink by 9% or more this year, the deepest contraction among the new EU members of Central and Southeast Europe, and one of the worst across the 27-member bloc as well as in the broader emerging Europe region.
The contraction is in large part due
to the slump in tourist numbers
visiting during the pandemic, and looking forward, “uncertainty and lingering travel restrictions weigh on exports, including tourism,” stated
the European Commission’s Autumn Forecast. Domestic demand is expected to be the main engine of the recovery, while exports will be slower to recover. “While goods exports should rise in line with the recovery in Croatia’s main trading partners, service sector exports, dominated by tourism, are expected
to remain under the pressure of travel restrictions, disruptions in air travel, and changes in consumer preferences
in favour of domestic travel,” the European Commission report says.
Croatia’s Prime Minister Andrej Plen- kovic commented back in May, when the details of the EU support were thrashed out, that they showed the benefits of EU membership. "I want
to send a message to the Croatian public that in a time of crisis we see the significance of membership [of] the EU and the significance of how much European funds help us to return to the path of economic recovery as soon as possible," Plenkovic said, accord- ing to a government statement.
Bulgaria, the EU’s poorest country and the biggest recipient of EU funds during the next seven years as a share of GDP along with Croatia, hasn’t been as badly hit by the coronacrisis as Croatia and is expected to see a more modest contraction this year.
The country is currently in the throes of the second wave of infections, with a second lockdown anticipated to
EU leaders, its future is still in ques- tion, as Poland and Hungary united to block the adoption of the budget and the recovery fund on November 16 over a provision linking the disbursement of the funds to respecting the rule of law. They must be adopted unanimously by all member states before being rati- fied by each parliament. While talks are underway in an attempt to find
a solution to the deadlock, there is a chance the EU could enter 2021 with a bare bones provisional budget.
The risk of losing billions of euros in much-needed funding has united many of their neighbours against the two illiberal democracies. The Czech and Slovak foreign ministers called at a joint press conference on November 18 for action to ensure the release of the funds.
Several days later, Romanian Prime Minister Ludovic Orban spoke out on the issue to Politico, calling on the two governments to reconsider. “The governments of the countries that oppose this conditionality must
“Bulgaria and Croatia will receive funding equivalent to 35% of their 2019 GDP, while Greece, Romania and Slovenia will get support amounting to 27%, 26% and 17% of their 2019 GDP respectively”
be imposed imminently. It is ranked first in terms of the share of people who have died from coronavirus in Europe in per capita terms. This is set to lead to a new fall in consumer confidence, further limiting private consumption. Bulgaria has also been shaken by a series of high-level corruption scandals that eventually sparked several months of daily mass protests this summer, dampening investor interest in the country.
While these and other states from the eastern part of the union are set to benefit disproportionately from the package currently being discussed by
understand that it is necessary to build public trust around this programme, which is extremely important for relaunching the economy of the whole of Europe, for the benefit of citizens
in Poland and Hungary,” said Orban.
The new member states that joined the EU from 2004 onwards have already received substantial amounts of fund- ing from previous budgets, that have supported investments into infrastruc- ture and other areas, helping their – as yet not completed – convergence with the older, Western members. The next budget and recovery funding is a chance to accelerate the catch-up process.
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