CEE Countries: International Competitiveness and Sector Performance
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Transcript of CEE Countries: International Competitiveness and Sector Performance
CEE Countries: International Competitiveness and Sector Performance
Vienna, 17 January 2007
UniCredit New Europe Research Network
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Together with China, CEE countries are among the best performers in world trade and among those gaining most in terms of presence in the EU15 market in the last decade
Both CEE and China are increasingly considered as the production arms of the EU15. Still there is not full competition between the two – as they tend to follow different specialisation patterns
CEE countries are gaining market shares particularly in some medium-high tech sectors. They already experienced a clear change in their international specialisation and production structure during the last decade
CEE countries have attracted and continue to attract significant amounts of FDIs, which have a strong positive impact on their export performance
Strengthening overall competitiveness, out from a low – labour cost specialisation model, is the key opportunity / challenge for the future. Growing relevance in terms of dimension of the local market, proximity to the EU, opportunity to build pan European production centres, educated and dynamic workforce and business friendly operating environments represent the real driving forces for future CEE growth. Preserving such dynamism is the real challenge.
Our sectoral outlook for 2007-2008 shows the strongest perspectives for medium-high tech sectors. Service sectors are also likely to record favourable growth, as well as construction.
Executive Summary
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Agenda
Foreign Direct Investments and CEE Attractiveness Factors
Sectoral Outlook 2007-2008: Best and Worst
CEE International Competitiveness and Sectoral Specialisation
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China and CEE gaining the most in terms of export market shares in the last decade at world level …
Source: UniCredit New Europe Research Network on IMF-DOTS1 CEE is including Poland, Hungary, Czech Rep., Slovakia, Slovenia, Turkey, Bulgaria, Romania, Croatia and the Baltics2 Emerging Asia includes India, Thailand, Indonesia, Malaysia, Singapore, Philippines, South Korea
Increasing relevance in world trade (export country i on world import, normalised 1995=100)
US8% CEE
4%Latin America
5%
Emerging Asia7%
China7%
Japan6%
EU1537%
Other26%
50
100
150
200
250
300
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
US CEE Latin AmericaEmerging Asia China EU15
Market share in world trade in 2005
China
CEE1
2
5
5
… and at the EU15 level
Source: UniCredit New Europe Research Network on IMF-DOTS 1 CEE is including Poland, Hungary, Czech Rep., Slovakia, Slovenia, Turkey, Bulgaria, Romania, Croatia and the Baltics2 Emerging Asia includes India, Thailand, Indonesia, Malaysia, Singapore, Philippines, South Korea
Increasing relevance in European trade (export country i on EU-15 import, normalised 1995=100)
Intra-trade65%
Latin America2%
Em. Asia3%
China4%
Japan2%
CEE8%
US5%Other
11%
50
100
150
200
250
300
350
400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
US CEE Latin AmericaEmerging Asia China EU15
Market share in EU15 import in 2005
China
CEE1
2
6
6
China, some energy producers and most CEE countries are the clear “winners” in EU15 markets
Top ten winners* in some EU15 markets: gain in EU15 import
1 market share in 1995-2005 in pp. points
1EU 15 imports means the sum of imports of each EU15 member country – intra EU 15 trade is included
Source: UniCredit New Europe Research Network on IMF-DOTS (current prices)
*countries that gained the most in terms of market shares in import in the period 1995-2005
Country% Gains1995-2005
Country% Gains1995-2005
Country% Gains1995-2005
Country% Gains1995-2005
1 China 2.6 Netherlands 3.3 Russia 3.2 Czech Rep. 0.52 Netherlands 1.8 China 3.0 China 2.0 Slovakia 0.33 Russia 1.6 Czech Rep. 2.2 Netherlands 1.6 Germany 0.34 Czech Rep. 1.0 Hungary 1.6 Poland 0.8 Netherlands 0.25 Poland 0.8 Poland 1.3 Romania 0.8 Hungary 0.26 Hungary 0.7 Russia 1.2 Turkey 0.7 Poland 0.27 Norway 0.4 Slovakia 0.7 South Korea 0.6 Russia 0.18 Turkey 0.4 Norway 0.6 Czech Rep. 0.5 Romania 0.19 Slovakia 0.3 Kazakhstan 0.3 Kazakhstan 0.5 China 0.1
10 Romania 0.2 Mexico 0.2 Hungary 0.4 Kazakhstan 0.1
In Austriain Italyin Eu-15 in Germany
7
7
Transport Equip. Electrical
Equip. Machinery Equip.
Basic metals and metal pr.
Oth. non-metallic mineral pr.
Rubber and plastic
Chemicals
Coke, refined petroleum
pr.
Furniture
Paper & publishing
Wood
Leather
Textiles
Food
-15%
-10%
-5%
0%
0% 5% 10% 15%
Increasing role of CEE and China as suppliers to the EU15 (change of CEE and China market share in EU15 imports, 2000-'06)
Dec
reas
ing
ro
le o
f E
U-1
5 in
tra
trad
e(c
han
ge
of
EU
-15
intr
a tr
ade
mar
ket
shar
e, 2
000-
'06)
Both CEE and China are gradually being considered the new production arm of the “old” Europe
Increasing role of CEE1 and China on European 15 imports (2000-’06)
1CEE is the sum of Poland, Hungary, Czech Rep., Slovakia, Turkey, Bulgaria, Romania, the Baltics
Source: UniCredit New Europe Research Network on Global Insight data
8
8
TransportEquip.
Electrical Equip.
Machinery and Equip.
Basic metals and metal pr.
Oth. non-metallic mineral pr.
Rubber plastic Chemicals
Furniture
Paper & publishing Wood
Leather
Textiles
Food, beverages0%
5%
10%
0% 1% 2% 3% 4% 5%Increasing relevance of CEE in EU15 imports(change of CEE market share in EU 15 imports, 2000-'06)
Inc
rea
sin
g r
ele
va
nc
e o
f C
hin
a i
n E
U1
5 i
mp
ort
s
(ch
an
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of
Ch
ine
se
ma
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t s
ha
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U1
5 i
mp
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s,
20
00
-'0
6)
There are some clear complementarities among the two – CEE and China follow different specialisation patterns
Increasing relevance of CEE1 and China on European imports:
1CEE is the sum of Poland, Hungary, Czech Rep., Slovakia, Turkey, Bulgaria, Romania, the Baltics; Source: UniCredit New Europe Research Network on Global Insight data
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CEE1 countries are gaining market shares, especially in some medium-high tech sectors
1CEE is the sum of Poland, Hungary, Czech Rep., Slovakia, Turkey, Bulgaria, Romania, the Baltics; Source: UniCredit New Europe Research Network on Global Insight data
0%
1%
2%
3%
4%
5%
6%
Foo
d, b
ever
ages
Tex
tiles
Lea
ther
Woo
d
Pap
er &
pub
lishin
g
Fur
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e
Cok
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fined
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Che
mica
ls
Rub
ber a
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lastic
Oth
. non
-met
allic
mine
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r.
Bas
ic m
etals
and
met
al pr
.
Mac
hiner
y and
Equ
ip.
Elec
trica
l Equ
ip.
Tra
nspo
rt Equ
ip.
Change in export share of CEE countries on EU-15 imports (change in % points, 2000-’06):
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Agenda
CEE International Competitiveness and Sectoral Specialisation
Investments and CEE Attractiveness Factors
Sectoral Outlook 2007-2008: Best and Worst
Foreign Direct Investments and CEE Attractiveness Factors
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CEE countries attract huge amounts of FDIs
Source: UniCredit New Europe Research Network, based on wiiw
FDI flows in CEE:
Not only privatisation related, but significant greenfield projects CEE countries are also becoming a relevant market of destination, hence attracting FDI in the
service sector, retail trade, communication An increasing contribution, in terms of FDI in the region, by Romania, Bulgaria, Turkey in the most
recent years, and by the Western Balkans for the future
Finance, Real Estate, Construction (32%)
Transport &Communication(13%)
Wholesale and retail Trade (14%) Electricity,
gas, water (4%)
Manufacturing(37%)
ConsumerGoods (26%)
IntermediateGoods (39%)
InvestmentGoods (35%)
-
5
10
15
20
25
30
35
40
45
1999 2000 2001 2002 2003 2004 2005
Other CEE (Baltics, HR, BiH, Serbia, Slovenia)
Turkey
Poland and Hungary
Czech Rep. and Slovakia
Bulgaria and Romania
bn USD
22bn 23bn 24bn26bn
18bn
37bn
48bnFDI in CEE by sector 2005
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12
Transport Equip.
Electrical Equip.
Machinery and Equip.
Basic metals and metal pr.
Oth. non-metallic mineral pr.
Rubber and plastic
Furniture
Paper & publishing
Wood
Leather
Textiles
1%
2%
3%
4%
5%
0% 50% 100% 150%Sectoral FDI attractiveness
(relevance of the sector in total FDIs normalised by the relevance of the sector in total production)
CE
E s
uc
cess
in e
xp
ort
per
form
an
ce
(Ch
an
ge
% o
f C
EE
ma
rke
t s
ha
re i
n E
U-1
5 i
mp
ort
s,
20
00
-'0
6)
A clear positive relation between FDI attractiveness and success in export performance
Source: UniCredit New Europe Research Network, on Global Insight and wiiw data *the index is calculated as the weight of the sector on total FDI/weight of the sector on production
*
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Each country with different factors of attractiveness
Factors of attractiveness (2005):
Source: UniCredit New Europe Research Network, on Eurostat, EBRD1Monthly labour cost is as of 2004 for Hungary, Bulgaria and EU, as of 2003 for Slovenia2CEE-8 is the weighted average of the countries that are EU members since 2004
PL HU CZ SK SI EE LV LT CEE-8 RO BG HR TK EU 15
Population (mn) 38.2 10.1 10.2 5.4 2.0 1.3 2.3 3.4 73.0 21.7 7.8 4.4 71.6 384.8
Average Age (years) 37 39 39 37 40 39 40 38 38 38 41 40 27 39
Students 15-24 years (% )
69 60 59 52 68 63 65 69 65 47 49 55 27 60
Tertiary graduates in science and technology per 1000 of population
9.4 5.1 7.4 9.2 9.3 8.9 9.4 17.5 8.9 9.8 8.5 5.4 5.6 13.6
GDP per Capita, € 6,384 8,689 9,785 7,084 13,699 7,825 5,493 6,010 7,412 3,659 2,758 6,965 4,058 26,730
Labour Productivity per person (EU25=100)
59 71 66 65 79 59 47 53 62 39 34 60 40 106
Monthly Labour Costs, €
808 875 949 620 1603 712 449 495 817 365 219 989 677 3431
Corporate tax (% ) 19 16 24 19 25 24 15 15 20 16 15 20 20 29
EBRD Infrastructure reform index
3.3 3.7 3.3 3 3 3.3 3.3 2.7 3.3 3.3 3 3 n.a. n.a.
1
2
14
14
Strengthening overall competitiveness is the key opportunity for the future …
size of the local market proximity to the EU opportunity of building pan European production centres dynamic workforce flexible and business friendly operating environment
Preserving such dynamism is the key challenge for the future!
Key FDI attractiveness factors to leverage on for the future:
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15
… while further opportunities in new emerging areas arise
•Local market potential•Competitive labour market, skilled personnel next to the EU
• Important steel producer
FDI stock: EUR 112 bn
FDI stock: EUR 14.5 bn
•Convergence to EU standards•Well-qualified labour force •Lower costs•Pending structural reforms with upcoming privatizations in the banking, telecom, food processing, textile, utilities and oil sectors
•Target for SME
•Convergence to EU standards•Transforming economic base, with dynamic growth and opportunities both for production and services
•Ongoing privatisation process with opportunities mainly in banking, telecom and utilities
•Target for SMEFDI stock: EUR 2.3 bn
FDI stock: EUR 4.8 bn
Bosnia-Herzegovina
Serbia
Russia
Ukraine
•Role of energy supplier and geo-strategic relevance
•Huge local market•Dynamic growth
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Agenda
CEE International Competitiveness and Sectoral Specialisation
Foreign Direct Investments and CEE Attractiveness Factors
Sectoral Outlook 2007-2008: Best and Worst
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PL = Poland, CZ = Czech Republic, SK = Slovakia, HU = Hungary, HR = Croatia, BG = Bulgaria, RO =Romania, TK = Turkey Source: UniCredit Group - New Europe Research Network
2007-2008: a bright outlook for medium-high tech sectors, less positive perspectives for labour intensive industries
BEST STABLE WORST
Agriculture, Hunting, Forestry, Fishing PL, CZ, SK, HR, BG, RO, TK HU Mining & Quarrying HR, BG, TK PL, CZ, SK, HU, RO Manufacturing
Food products; beverages and tobacco PL, CZ, SK, HR, BG, RO, TK HUTextiles and textile products SK, BG PL, CZ, HU, HR, RO, TKLeather and leather products CZ, BG PL, SK, HU, HR, RO, TKWood and wood products RO, TK PL, CZ, SK, HR, BG HUPulp, paper & paper products; publishing & printing PL, HR CZ, SK, HU, BG, RO, TKCoke, refined petroleum products & nuclear fuel PL, CZ, SK, HU, HR, BG, RO, TKChemicals, chemical products and man-made fibres PL, CZ, SK, HU, HR, BG, RO, TKRubber and plastic products PL, CZ, SK, HU HR, BG, RO, TK Other non-metallic mineral products PL, HR, BG, RO, TK CZ, SK, HUBasic metals and fabricated metal products SK, BG PL, CZ, HU, HR, RO, TKMachinery and equipment n.e.c. PL, CZ, SK, HU, TK HR, BG, ROElectrical and optical equipment PL, CZ, SK, HU, HR, BG, RO, TKTransport equipment PL, CZ, SK, HU, BG, RO, TK HRManufacturing n.e.c. SK, HR, BG, RO, TK PL, CZ, HU Electricity, Gas & Water PL, CZ, SK, HU, HR, BG, RO, TK Construction PL, SK, HR, BG, RO, TK CZ, HU Wholesale & Retail Trade, Hotels & Restaurants
Wholesale & Retail Trade BG, RO PL, CZ, SK, HU, HR, TKHotels & Restaurants HR PL, SK, HU, BG, RO, TK CZ Transportation & Communications HR CZ, TKTransportation & Storage PL, SK, HU, BG, ROCommunications BG, RO PL, SK, HU Finance, Insurance, Real Estate & Bus. Services BGFinancial Institutions & Insurance PL, HU, HR, RO CZ, SK, TKReal Estate, Dwellings & Business Services CZ, HR, RO PL, SK, HU, TK Community, Social & Personal Services PL, SK, HU, HR, RO, TK CZ, BG
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Transport equipment (automotive and related components, ships, boats, locomotives, etc.): a very positive outlook, with full exploitation of new FDI related production capacity
Note 1: PL = Poland, CZ = Czech Republic, SK = Slovakia, HU = Hungary, HR = Croatia, BG = Bulgaria, RO=Romania, TK = TurkeyNote 2: CAGR = Cumulative Aggregate Growth Rate; GVA = Gross Value Added Note 3: Growth rates are in terms of Industrial Production in CZ, HR, PL, RO, TKSource: UniCredit Group - New Europe Research Network
Main characteristics:
Among the best performing sectors in almost all the countries, representing a significant share of total manufacturing production in CZ, HU, SK, RM, PL and TK and a significant driver for other economic sectors
With Fiat in PL, VW in PL and SK, Audi in HU, Skoda, Toyota PSA and Hyundai in the CR and Kia and PSA Peugeot Citroen in SK, Central European countries have gradually become a quite significant production centre for this sector at the whole European level
The sector is developing fast also in BG - despite the still low relevance for the economy – thanks to new foreign entry in car spare-parts production
In HR, Transport Equipment mainly means shipbuilding
BEST PERFORMER
Transport Equipment
ROTK
BG
HR
SK
CZPL
EU15
HU
0.0
5.0
10.0
15.0
20.0
25.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Share in GVA - 2005 (%)
CA
GR
2005 -
2008 (
%)
Central EuropeSEE
Transport Equipment - growth rates (%)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
EU15 PL CZ SK HU HR BG RO TK
2006
2007
2008
19
19
Electrical & optical equipment (electric motors, radio/ television eq., optical and medical instruments, computers, etc.): strong performance for an increasingly relevant mid-high technology sector
Main characteristics:
The sector is classified as best in all the countries, with the strongest growth recorded in Central Europe
The sector is attractive for FDI and highly export oriented, despite increasing competition from the Far East. Still, growth prospects are associated to the strong foreign and domestic demand
PL and SK are becoming production centres at the EU level for TV-sets, LCD screens, while the CR is the only country of the region with a significant computer production specialisation
Possible impact from raw materials price-increase and from the EU directive about restriction of hazardous substances
BEST PERFORMER
Note 1: PL = Poland, CZ = Czech Republic, SK = Slovakia, HU = Hungary, HR = Croatia, BG = Bulgaria, RO= Romania, TK = TurkeyNote 2: CAGR = Cumulative Aggregate Growth Rate; GVA = Gross Value Added Note 3: Growth rates are in terms of Industrial Production in CZ, HR, PL, RO, TKSource: UniCredit Group - New Europe Research Network
Electrical & Optical Equipment
RO
TK
BG
HR
SK
CZ
PL
EU15
HU
0.0
5.0
10.0
15.0
20.0
25.0
0.0 1.0 2.0 3.0 4.0 5.0
Share in GVA - 2005 (%)
CA
GR
2005 -
2008 (
%)
Central EuropeSEE
Electrical & Optical Equipment - growth rates (%)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
EU15 PL CZ SK HU HR BG RO TK
2006
2007
2008
20
20
Machinery & equipment (industrial machinery and households appliances): quite positive dynamics, supported by widespread investment demand
Main characteristics:
One of the long lasting traditional industries, classified as Best in Central Europe and TK - where a substantial shift towards higher engineering productions already occurred
Widely export oriented – the sector is gaining export shares on the international markets. Still, the sector is also characterized by high imports (with strong domestic investments in new production capacities)
The sector looks attractive for FDI
Manufactures of household appliances is the most accelerating segment, together with production of machinery and engines, supporting the investment activity
In HR, BG and RM, the sector still needs further modernisation and restructuringBEST
PERFORMER
Note 1: PL = Poland, CZ = Czech Republic, SK = Slovakia, HU = Hungary, HR = Croatia, BG = Bulgaria, RO= Romania, TK = TurkeyNote 2: CAGR = Cumulative Aggregate Growth Rate; GVA = Gross Value Added Note 3: Growth rates are in terms of Industrial Production in CZ, HR, PL, RO, TKSource: UniCredit Group - New Europe Research Network
Machinery & Equipment n.e.c.
HU
EU15
PL
CZSKHR
BG
TK
RO
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
0.3 0.8 1.3 1.8 2.3 2.8
Share in GVA - 2005 (%)
CA
GR
2005 -
2008 (
%)
c
Central EuropeSEE
Machinery & Equipment n.e.c. - growth rates (%)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
EU15 PL CZ SK HU HR BG RO TK
2006
2007
2008
21
21
Construction: still very good prospects, mainly driven by infrastructural projects
Main characteristics:
Generally a fast developing sector all over the region, considered Best everywhere apart from HU and CZ
Main drivers of growth: widespread investment activity in infrastructural projects, other than residential and corporate building
EU countries benefiting also from inflows of EU funds, but in CZ and HU, fiscal concerns and lack of public funds dampen the sector activity
BEST PERFORMER
Note 1: PL = Poland, CZ = Czech Republic, SK = Slovakia, HU = Hungary, HR = Croatia, BG = Bulgaria, RO= Romania, TK = TurkeyNote 2: CAGR = Cumulative Aggregate Growth Rate; GVA = Gross Value Added Source: UniCredit Group - New Europe Research Network
Construction
RO
TK
BG
HR
SK
CZ
PL
EU15HU0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
4.5 5.0 5.5 6.0 6.5 7.0
Share in GVA - 2005 (%)
CA
GR
200
5 -
2008
(%
)
Central EuropeSEE
Construction - growth rates (%)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
EU15 PL CZ SK HU HR BG RO TK
2006
2007
2008
22
22
Textiles & textile products: negative outlook on increasing labour costs
Main characteristics:
The industry is very relevant in RM, BG, and especially TK, where a long lasting tradition is present
Generally we see a negative outlook all over the region, based on increasingly strong competition from the Far East and consequent relocation of production
Still, in BG foreign companies in the short to medium term are managing to remain competitive
In SK, the automotive boom seems to support a temporary recovery, though we remain cautious on the long term
WORST PERFORMER
Note 1: PL = Poland, CZ = Czech Republic, SK = Slovakia, HU = Hungary, HR = Croatia, BG = Bulgaria, RO= Romania, TK = TurkeyNote 2: CAGR = Cumulative Aggregate Growth Rate; GVA = Gross Value Added Note 3: Growth rates are in terms of Industrial Production in CZ, HR, PL, RO, TKSource: UniCredit Group - New Europe Research Network
Textiles & Textile Products - growth rates (%)
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
EU15 PL CZ SK HU HR BG RO TK
2006
2007
2008
Textiles & Textile Products
HUEU15
PL
CZ
SK
HR
BG
TK
RO
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Share in GVA - 2005 (%)
CA
GR
200
5 -
2008
(%
)
Central EuropeSEE
CEE Countries: International Competitiveness and Sector Performance
Vienna, 17 January 2007
UniCredit New Europe Research Network
www.unicreditgroup.eu