CESEE Region Back on Track to Convergence Peter Havlik · Back on track to convergence, but it is a...
Transcript of CESEE Region Back on Track to Convergence Peter Havlik · Back on track to convergence, but it is a...
Wiener Institut für
Internationale
Wirtschaftsvergleiche
The Vienna Institute for
International Economic
Studies
wiiw.ac.at
Press conference, 9 November 2017
New wiiw forecast for Central, East and Southeast Europe, 2017-2019
CESEE Region Back on Track to Convergence
Peter Havlik
International GDP, real growth in %
The global outlook has improved and the economic
recovery is gaining strength in Europe as well …
2
3
4
USA DE IT AT
2Note: Dashed lines are forecasts.
Source: WEO (IMF), October 2017.
-4
-3
-2
-1
0
1
2
2012 2013 2014 2015 2016 2017 2018
Economic Sentiment Indicator (100 = long-run average)
Both economic developments and investors’ sentiments
are apparently decoupled from politics …
110
115
120
EU EU-CEE WB-3 TR
3Note: WB-3 comprises MK, ME and RS.
Source: Yahoo! Finance, Eurostat.
80
85
90
95
100
105
110
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
Ju
n-1
5
Ju
l-1
5
Au
g-1
5
Se
p-1
5
Oct-
15
No
v-1
5
De
c-1
5
Ja
n-1
6
Fe
b-1
6
Ma
r-1
6
Ap
r-1
6
Ma
y-1
6
Ju
n-1
6
Ju
l-1
6
Au
g-1
6
Se
p-1
6
Oct-
16
No
v-1
6
De
c-1
6
Ja
n-1
7
Fe
b-1
7
Ma
r-1
7
Ap
r-1
7
Ma
y-1
7
Ju
n-1
7
Ju
l-1
7
Au
g-1
7
Se
p-1
7
Quarterly real GDP growth, change in % against preceding year
EU-CEE enjoy robust growth, Western Balkans and Turkey
uneven; recovery in the CIS and Ukraine is weaker
-5
0
5
10
15BG CZ HUPL RO SK
-5
0
5
10
15EE HR LTLV SI EA-19
4Source: wiiw Monthly Database incorporating national and Eurostat statistics.
-20
-15
-10
4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 4Q 13 4Q 14 4Q 15 4Q 16 2Q 17-20
-15
-10
4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 4Q 13 4Q 14 4Q 15 4Q 16 2Q 17
-20
-15
-10
-5
0
5
10
15
4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 4Q 13 4Q 14 4Q 15 4Q 16 2Q 17
AL BA ME
MK RS XK
-20
-15
-10
-5
0
5
10
15
4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 4Q 13 4Q 14 4Q 15 4Q 16 2Q 17
BY KZ RU UA TR
Employed persons, LFS, thousand, based on 1Q 2010 = 100, 4 quarters
moving averages
Rising employment in most EU-CEE (also in Western
Balkans), but not in LV, HR, RU, KZ and UA …
120
125
130BG CZ HU
PL RO SK 125
130 EE HR LT
LV SI
5Note: BA: employees registered.
Source: wiiw Monthly Database incorporating national and Eurostat statistics.
90
95
100
105
110
115
120
4Q 08
4Q 09
4Q 10
4Q 11
4Q 12
4Q 13
4Q 14
4Q 15
4Q 16
2Q 17
90
95
100
105
110
115
120
4Q 08
4Q 09
4Q 10
4Q 11
4Q 12
4Q 13
4Q 14
4Q 15
4Q 16
2Q 17
Unemployed persons, LFS, thousand, based on 1Q 2010 = 100, 4 quarters
moving averages
… mirrored by declining unemployment (but rates differ!)
140
160
180 BG CZ HU
PL RO SK
160
180 EE HR LT
LV SI
6Note: BA: unemployed registered.
Source: wiiw Monthly Database incorporating national and Eurostat statistics.
20
40
60
80
100
120
140
4Q 08
4Q 09
4Q 10
4Q 11
4Q 12
4Q 13
4Q 14
4Q 15
4Q 16
2Q 17
20
40
60
80
100
120
140
4Q 08
4Q 09
4Q 10
4Q 11
4Q 12
4Q 13
4Q 14
4Q 15
4Q 16
2Q 17
Average monthly real gross wages total, change in % against preceding year
Labour shortages hand in hand with rising wages …
15
20 BG CZ HU
PL RO SK
15
20 EE HR LT
LV SI
7Source: wiiw Monthly Database incorporating national and Eurostat statistics.
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-5
0
5
10
1Q 10
1Q 11
1Q 12
1Q 13
1Q 14
1Q 15
1Q 16
1Q 17
-10
-5
0
5
10
1Q 10
1Q 11
1Q 12
1Q 13
1Q 14
1Q 15
1Q 16
1Q 17
Average monthly gross wages, EUR (ER)
EU-CEE gross wages range from EUR 500 (BG) to
EUR 1600 (SI) in 2016
600
800
1000
1200
1400
1600 1995 2000 2005 2010 2016
8Note: Data 1995: Bosnia and Herzegovina 1996, Serbia 1999.
Source: wiiw Annual Database incorporating national and Eurostat statistics.
0
200
400
600
BG CZ EE HR HU LT LV PL RO SI SK
0
200
400
600
800
1000
1200
1400
1600
AL BA ME MK RS XK BY KZ RU UA
Austria: EUR 3600
Unit labour costs in comparison, PPP adjusted, Austria = 100
ULC levels mostly dropped between 2010 and 2016 and
competitiveness improved (except BG, HU, EE, AL, RS, XK)
30
40
50
60
70 1995 2000 2005 2010 2016
9Note: Data 1995: Romania and Macedonia 1996, Bosnia and Herzegovina and Serbia 1999. Data 2000: Kosovo 2004.
Source: wiiw Annual Database incorporating national and Eurostat statistics.
0
10
20
BG CZ EE HR HU LT LV PL RO SI SK
0
10
20
30
40
50
60
70
AL BA ME MK RS XK BY KZ RU UA
GDP growth in 2016-2019 (in %) and contribution of individual demand
components in percentage points
Main GDP growth driver is household consumption,
gradually aided by investments and also net exports …
4
6
8
10
Household final consumption Change in inventories
Gross fixed capital formation Government final consumption
Net exports GDP total
10Source: wiiw Annual Database incorporating national and Eurostat statistics.
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-2
0
2
4
BG CZ EE HR HU LT LV PL RO SI SK
'16 '17 '18 '19
-4-202468
10
AL BA ME MK RS XK TR
-4-202468
10
BY KZ RU UA
'16 '17 '18 '19'16 '17 '18 '19
EU-CEE
WB + TR CIS + UA
Growth forecasts revised mostly upwards …
Real GDP growth forecast and revisionsForecast, % Revisions, pp
2017 2018 2019 2017 2018 2019
BG 3.8 3.7 3.5 0.9 0.6 0.2
CZ 3.7 3.2 3.0 1.3 0.6 0.7
EE 3.8 3.3 2.9 1.6 1.0 0.5
HR 3.0 2.7 3.0 0.2 -0.2 0.0
HU 4.0 3.9 3.0 0.7 0.5 -0.1
LT 3.8 3.5 2.8 1.1 0.7 -0.3EU-CEE
11Note: Current (October 2017) forecast and revisions relative to the wiiw spring forecast 2017. Colour scale reflects
variation from the minimum (red) to the maximum (green) values. Source: wiiw forecast October 2017.
LT 3.8 3.5 2.8 1.1 0.7 -0.3
LV 4.2 3.8 3.2 1.7 1.1 0.4
PL 3.8 3.5 3.3 0.9 0.5 0.2
RO 5.7 4.5 4.6 1.7 0.5 0.6
SI 4.0 3.9 3.7 1.1 1.0 0.7
SK 3.3 3.6 4.0 0.2 0.0 0.1
AL 3.9 4.2 4.1 0.4 0.3 0.1
BA 3.0 3.4 3.5 0.2 0.4 0.4
ME 2.7 2.9 3.0 -0.4 0.0 -0.3
MK 1.8 3.1 3.4 -1.3 -0.2 0.4
RS 1.9 2.5 2.7 -0.9 -0.5 -0.6
XK 3.7 3.8 3.8 -0.2 0.0 0.1
Turkey TR 5.4 3.9 3.9 3.3 1.3 0.8
BY 2.0 2.3 2.6 1.5 0.7 0.4
KZ 3.0 3.0 3.5 1.0 0.0 0.5
RU 1.7 1.9 1.9 0.0 0.2 -0.1
UA 2.0 3.0 3.0 -0.5 0.0 0.0
EU-CEE
WB
CIS +UA
GDP grows at three speeds: EU-CEE, Western Balkans, CIS
2017 2018 2019
RO Romania 5.7 4.5 4.6
TR Turkey 5.4 3.9 3.9
LV Latvia 4.2 3.8 3.2
2017 2018 2019
XK Kosovo 3.7 3.8 3.8
SK Slovakia 3.3 3.6 4.0
HR Croatia 3.0 2.7 3.0
12Forecast: wiiw (October 2017).
LV Latvia 4.2 3.8 3.2
HU Hungary 4.0 3.9 3.0
SI Slovenia 4.0 3.9 3.7
AL Albania 3.9 4.2 4.1
BG Bulgaria 3.8 3.7 3.5
EE Estonia 3.8 3.3 2.9
LT Lithuania 3.8 3.5 2.8
PL Poland 3.8 3.5 3.3
CZ Czech Republic 3.7 3.2 3.0
BA Bosnia & Herzegovina 3.0 3.4 3.5
KZ Kazakhstan 3.0 3.0 3.5
ME Montenegro 2.7 2.9 3.0
BY Belarus 2.0 2.3 2.6
UA Ukraine 2.0 3.0 3.0
RS Serbia 1.9 2.5 2.7
MK Macedonia 1.8 3.1 3.4
RU Russia 1.7 1.9 1.9
� The EU-CEE region is catching up again
� Economic convergence has resumed at a somewhat greater speed
than expected in spring
A New Normal ? CESEE region back on track
to convergence
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� The catching-up process will continue at least in the medium run
� Convergence is not expected to resume in Russia
� Meagre growth in Russia will adversely affect the growth prospects of
its CIS partners
� Economic growth seems to be largely unaffected by geopolitical
challenges and political instability
Special section I
Back on track to convergence, but it is a long-term
process: GDP per capita at PPP (EU-28 = 100)
2026
SK
SI
RO
14
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0
2000
2008
2016
RO
PL
HU
LT
LV
HR
EE
CZ
BG
Special section II
The euro will survive and attract new members …
Euro accession is in the interests of Croatia and Bulgaria
15
Euro accession is potentially advantageous for Hungary and Poland
The case is less clear cut for the Czech Republic and Romania
But: in neither case would accession to the eurozone be harmful
Special section III
Many CESEE sovereigns are vulnerable to a sharp rise in
debt yields …
Sovereign risk rating, average score (less is worse)
3.0
3.5
16
0.0
0.5
1.0
1.5
2.0
2.5
CZ, EE BG, LT SK, SI TR PL, RO KZ, LV HU, XK, MK
HR, RU AL MD BA, RS BY UA
Special section III
Many CESEE sovereigns are vulnerable to a sharp rise in
debt yields …
In some cases they are in a worse position than 10 years ago
17
Bond markets could panic, leading to funding difficulties for countries
with heavy debt loads
Ukraine stands out as particularly vulnerable from a sovereign risk
perspective
Belarus and many countries in the Western Balkans are also in a
weak position
Wiener Institut für
Internationale
Wirtschaftsvergleiche
The Vienna Institute for
International Economic
Studies
www.wiiw.ac.at
Thank you for your attention!
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Country codes
AL Albania ME Montenegro
BY Belarus MK Macedonia
BA Bosnia and Herzegovina PL Poland
BG Bulgaria RO Romania
CZ Czech Republic RS Serbia
EE Estonia RU Russia
HR Croatia SI Slovenia
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HR Croatia SI Slovenia
HU Hungary SK Slovakia
KZ Kazakhstan TR Turkey
LT Lithuania UA Ukraine
LV Latvia XK Kosovo
CESEE Central, East and Southeast Europe
CIS Commonwealth of Independent States
EU-CEE European Union – Central and Eastern Europe
WB Western Balkans