The Economic Boom in CEE Continues

Despite an economic slack in the EU 15 and, in many cases, the revaluated currencies, CEE countries achieved a sturdy growth again in 2005. This was primarily due to increased exports in the new EU member states and, throughout the remainder of CEE, as a result of booming consumption. The economic accomplishments of the new EU member states and also those of the acceding countries Bulgaria and Romania are largely based on successful restructuring, thanks to a massive influx of foreign direct investments (FDI). The western Balkan countries are increasingly benefiting from greater political stability and improved chances of an EU integration, whereas Russia and the Ukraine continue to be dependent on the world market economic situation, as regards energy and metals. For the first time, the largely completed restructuring of industries in the new EU member states resulted in a slight easing of tension within the labour market. Simultaneously, however, unemployment remains very high in many southern European countries and, in view of forthcoming restructuring, may rise further. Despite an impressive growth of exports in many new EU member states, sustained increasingly by improved quality standards, the external position of these countries remains high in deficit, in view of FDI-related profit. In southeast Europe, the boom in consumption has resulted in a breakneck increase in private foreign indebtedness.MOEL Mittel- und Osteuropa Konjunktur 2005