Post-Crisis Economic Development of the EU and Bulgaria Sofia, 18-19 October 2012
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Economic Crisis: The Way Out?Economic Crisis: The Way Out?An Eastern European PerspectiveAn Eastern European Perspective
Sándor Meisel – Krisztina VidaSándor Meisel – Krisztina VidaInstitute for World EconomicsInstitute for World Economics
Research Research CCentre for Economic and Regional Studies of the HASentre for Economic and Regional Studies of the HAS
Post-Crisis Economic Developmentof the EU and Bulgaria
Sofia, 18-19 October 2012
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Objectives and challenges
• Fiscal stabilisation: government deficits
government depts
• Reform of the systems of redistribution: sustainability
• Growth and convergence
• Competitiveness
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Political conditions
• Relative stability– exception: RO– elections: LT and RO
• Living standards (GDP/cap)
• Employment rates
• Unemployment
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Slow catching up with differences(GDP/cap, EU27=100%)
GDP/fő (EU27=100)
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011
EU15
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Low but slightly improving employment
Foglalkoztatás
0
10
20
30
40
50
60
70
80
2006 2007 2008 2009 2010 2011
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Relatively high unemployment
Munkanélküliség
02468
101214161820
2006 2007 2008 2009 2010 2011
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Economic conditions
• Growth• Investments• FDI• Foreign trade • Current account balance• Inflation• Public finances and reforms
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Improving growth expectations?(GDP growth, annual change, %)
GDP-változás az előző év százalékában
-20
-15
-10
-5
0
5
10
15
2007 2008 2009 2010 2011 2012 2013
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Gross fixed capital formation(as % of GDP)
Bruttó állótőke-felhalmozás/GDP
0
5
10
15
20
25
30
35
40
45
2007 2008 2009 2010 2011 2012 2013
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Declining FDI inflow(EUR billion)
FDI (mrd. euró)
-10
0
10
20
30
40
50
60
2007 2008 2009 2010 2011 2012
SK
SI
RO
PL
HU
LT
LV
EE
CZ
BG
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Current account balance(as % of GDP)
Folyó fizetési mérleg/GDP
-30
-25
-20
-15
-10
-5
0
5
10
15
2006 2007 2008 2009 2010 2011
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Lower inflation rates: are they sustainable?
HICP
-4-202468
1012141618
2007 2008 2009 2010 2011 2012 2013
EU
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Government deficit: improving trends
(as % of GDP)
Költségvetési egyenleg/GDP
-12
-10
-8
-6
-4
-2
0
2
4
6
2007 2008 2009 2010 2011 2012 2013
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Public finances: common features of the reforms
• Income: – increasing taxes– new taxes– improvements in tax collection– privatisation
• Expenditure:– streamlining the public administration– freezing (cutting) the wages in the public sector– reform of the pension and health care system– Reshaping of the social payments
• Changes in the level of redistribution between 2008-12:– decreasing level: BG, RO, LT– same level: LV, HU, PL– increasing level: CZ, EE, SK, SI
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Growing public dept(as % of GDP)
Államadósság/GDP
0102030405060708090
2007 2008 2009 2010 2011 2012 2013
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Competiveness
• Labour productivity per person employed
• Real unit labour cost
• Innovation ranking
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Labour productivity per person: slow improvements
Termelékenység/foglalkoztatott
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Real unit labour cost: favourable trends from the point of view of competition, but slow catching up
of wages
ULC változása
-10-8-6
-4-2024
68
10
2006 2007 2008 2009 2010 2011
EU27
BG
CZ
EE
LV
LT
HU
PL
RO
SI
SK
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Innovation performance
Countries Ranking in the EU
Performance
PL 23. Moderate innovation potential
CZ 17. Moderate innovation potential
SK 22. Moderate innovation potential
HU 19. Moderate innovation potential
SI 12. Innovation follower
EE 14. Innovation follower
LV 27. Modest innovation potential
LT 25. Modest innovation potential
RO 24. Modest innovation potential
BG 26. Modest innovation potential
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Conclusions
• Crisis slowed down catching up
• In 2011 recovery, in 2012 more modest trends better outlook in 2013
• The pre-crisis dynamism is not likely to return
• Probably more balanced and sustainable growth path, depending on the external conditions
• Public finances on the way of slow consolidation