GEOMETR.IT Way of the World
* Nowhere in the world have expectations for growth changed so rapidly and positively as in central and eastern Europe.
The consensus forecast for economic growth in the region this year is now 2.5 per cent — 0.3 per cent points higher than four months ago. Expectations for 2018 are even brighter at 2.6 per cent, 0.1 percentage points higher than forecast at the start of the year.
“The recent strong run of economic data — particularly the stronger-than-expected Q1 GDP — has prompted analysts to revise up their forecasts,” says Liam Carson, Emerging Europe economist at Capital Economics. Romania, for example, grew at an annual rate of 5.6 per cent — the highest rate in the EU — while the consensus pointed to a more subdued 4.4 per cent.
The consensus improvement for the region would be even stronger if Russia — where growth of 1.2 per cent is forecast this year — were excluded from the figures.
What is behind the improving picture? Stronger-than-expected demand elsewhere, a tighter labour market, an attractive environment for foreign investment, government stimulus measures, easy financing conditions and the revival of EU structural funds are all supporting stronger growth in the region.
Strong labour markets support growth in the region
Unemployment rates in Poland, Czech Republic and Romania are all below the European average and at their all-time low. This is largely the result of growth in economic activity but also of emigration and a limited number of young people entering the labour force.
The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: Way of the World