Erste - 08.07.2011
We expect most of the CEE countries to
remain on their path of solid economic
performance in the second half of the year.
The countries trailing the lot hitherto, i.e.
Hungary, Romania, and Croatia, should catch
up, but the gap to the growth rates of the top
bracket (Poland, Slovakia) should remain
sizeable. The crucial factor for our growth
forecasts is the fact that we expect a shifting
among the growth drivers. The economic
recovery after the crisis was essentially based
on foreign trade across the region; foreign
trade in turn was directly or indirectly
influenced by the emerging economies in Asia
and Latin America. Here, not only the growth
dynamics as such played an important part,
but also the catch-up effects in the wake of the
massive slump in 2009. Whether the
emerging markets can maintain their growth
dynamics is at the very least arguable. But the
catch-up effects will be subsiding, that much
is for sure. The growth rates of the industrial
sector have already started to come down
from their high levels. It will therefore be
crucial for the weaker growth stimulus derived
from foreign trade to at least be balanced out
by higher investment activity. There are indeed
many signs suggesting that this is what will
happen. The capacity utilisation of the industry
has increased drastically on the back of the
strong demand and is close to pre-crisis
levels, which used to reflect years of strong
economic performance. However, the next
step due on the road to full recovery stronger
growth of private consumption will still take a
while to come through. The labour markets in
the area have hardly rebounded at all, and the
consolidation of the public budgets also eats
into the propensity to consume. We only
expect this area to improve significantly next
year. Turkey is the odd one out in a positive
sense, having gone through a much speedier
recovery than the rest of the countries in the
region, and with said recovery driven by
domestic demand. However, the current
growth rates in Turkey are undoubtedly too
high and the Turkish economic policy is faced
with the challenge of ensuring a soft landing
for the economy.
Source : bne
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