Economic forecasts for the candidate countries

Directorate-General For Economic And Financial Affairs

Description

Autumn 2002
Construction of Europe
Economic policy - Economic and Monetary Union
Target audience: All

Informations

• Publié par: DIRECTORATE-GENERAL-FOR-ECONOMIC-AND-FINANCIAL-AFFAIRS
• Nombre de lectures: 8
• Langue: English

Extrait

EUROPEAN COMMISSION

DIRECTORATE-GENERAL FOR ECONOMIC AND FINANCIAL AFFAIRS

ENLARGEMENT PAPERS

Issn 1608-9022 http://europa.eu.int/comm/economy_finance N° 12 - November 2002   Economic Forecasts for the candidate countries Autumn 2002 by Directorate General for Economic and Financial Affairs

ECFIN/562/02  EN

KC-AA-02-012-EN-C

© European Communities, 2002.

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European Commission Forecast for the Candidate Countries Autumn 2002

Highlights ......................................................................................................................... 3 Overview .......................................................................................................................... 4 Cyprus............................................................................................................................. 10 Czech Republic............................................................................................................... 13 Estonia ............................................................................................................................ 16 Hungary .......................................................................................................................... 19 Latvia..............................................................................................................................22 Lithuania.........................................................................................................................25 Malta............................................................................................................................... 28 Poland ............................................................................................................................. 31 Slovak Republic.............................................................................................................. 34 Slovenia .......................................................................................................................... 37 Bulgaria .......................................................................................................................... 41 Romania.......................................................................................................................... 44 Turkey............................................................................................................................. 47 Data Annex.....................................................................................................................50

3 - - E CONOMIC FORECASTS FOR THE CANDIDATE COUNTRIES A NMUTU  2002 1 H IGHLIGHTS    Candidate countries have, on average, sustained solid growth despite the worsened international economic climate. Economic growth has only slightly slowed down during 2002. Due to strong domestic demand, most candidate countries showed resilience and the extent of the slowdown remained limited. In the current year, growth should amount to 2.1% for the ten acceding   countries and 2.9% for all candidate countries. This represents a slight downward revision from the Spring forecast. An expected return to normal external and domestic developments should allow to reach average growth of close to and beyond 4% in 2003 and 2004.    Lower international commodity prices and weaker growth have contributed to a further fall in inflation in 2002. The expected further slowdown of inflation in 2003 and 2004 will be mainly the result of policy efforts to reduce inflation in the high-inflation countries Romania and Turkey.    Over the forecasting period, employment losses due to continued enterprise restructuring should be progressively compensated by higher employment creation and should lead to a slightly improved overall labour market situation up to 2004.    The acceleration of export demand in 2003 and 2004 should prevent a significant deterioration of external balances, even with strong domestic demand.    deficits remain relatively high as the combined result ofGeneral government lower growth and counter-cyclical fiscal policies in some countries in the early years, and high transition-related expenditures over the whole forecasting period.

TABLE 1:Main features of the Autumn 2002 forecast (annual percentage change, unle  countries (CC-13) CandidateAcceding countries (AC-10) ss otherwise specified) 2001 2002 2003 2004 2001 2002 2003 2004 GDP growth -0.1 2.9 3.8 4.42.5 2.1 3.6 4.2 Inflation  (a) 5.7 2.9 3.3 3.6 24.2 18.4 11.6 8.8 Employment-0.9 -0.7 0.7 1.1 -1.0 -0.2 0.7 1.0 Unemployment  (b)  11.714.6 14.6 14.4 13.9 11.9 11.7 11.4 Government balance (c) -4.0 -4.9 -4.7 -3.9 -12.5 -7.3 -6.3 -5.1 Trade balance (c) -5.5 -5.8 -5.7 -5.4 -5.0 -5.5 -5.5 -5.4 Current account balance (c)  -3.0 -3.1 -3.1 -1.8-3.7 -4.1 -3.9 -3.7 (a) average consumer price index (b) percentage of labour force (c) percentage of GDP

                                                 1  The forecasts are based on available data up to 4 November 2002.

- 4 -   O VERVIEW Continued solid growth despite a more difficult economic environment The international environment has further deteriorated since the Commission's Spring 2002 forecast. Economic growth in the EU in 2002 and 2003 has been revised downwards to 1% and 2% respectively, from 1.5% and 2.9% in Spring. On the other hand, growth in the former Soviet Union, and in particular in Russia, remains solid at around 4%. The autumn forecasts for candidate countries reflect this development. This weaker situation of main trading and investment partners of candidate countries will weigh on the recovery of exports and the general economic situation. The lower economic growth in the world and in main trade partners affects the growth of export markets for candidate countries. For the 10 acceding countries it is now forecast to be just around 1½% in 2002. Export market growth would reaccelerate in 2003 to more than 6% and even further in 2004 to more than 7%. TABLE 2:International environment Autumn 2002  Difference to Spring 2002 (annual percentage change) 2001 2002 2003 2004 2001 2002 2003 Real GDP growth EU-15 1.6 1.0 2.0 2.6 -0.1 -0.5 -0.9 Germany 0.6 0.4 1.4 2.3 0.0 -0.4 -1.3 Italy 1.8 0.4 1.8 2.4 0.0 -1.0 -0.9 Austria 0.7 0.7 1.8 2.2 -0.3 -0.5 -0.7 CIS 6.0 4.3 4.5 4.3 0.5 0.2 -0.1 Russia 5.0 3.9 4.3 4.0 0.0 0.2 -0.2 USA 0.3 2.3 2.3 2.8 -0.9 -0.4 -0.8 Japan -0.1 -0.6 1.2 1.4 0.4 0.2 0.6 WORLD 2.2 2.6 3.6 4.0 -0.1 -0.3 -0.3 Export market CC-10 (a)  -1.6 -1.0 0.02.6 1.4 6.3 7.2 Oil price (b) 25.0 25.5 24.1 22.5 0.0 1.7 0.0 (a) Assuming constant market shares (b) Brent oil, price per barrel in USD This has led to a, comparatively limited, downward revision of GDP growth in the acceding countries, by 0.4 percentage points to 2.1% in 2002 and by 0.2 percentage points to 3.6% in 2003. For 2004 growth is seen to accelerate to 4.2%. In 2002 growth is particularly weak in Poland. There domestic demand had contracted by nearly 2% in 2001 and brought the economy to near stagnation, as a consequence of a poorly co- ordinated policy mix, resulting in very tight monetary conditions. Yet, a recovery seems on its way and growth rates should climb back to rates above 4% in 2004. The other acceding countries are expected to continue on their, already in 2001 and 2002, relatively solid growth path. Latvia is expected to enjoy the fastest growth over the forecast period, with average growth of 5.5% over 2002-2004. Estonia, Hungary, Lithuania, Romania and the Slovak Republic are forecast to grow above 4% on average for the same period. Among the other candidate countries, Turkey has equally started to recover from its very deep stabilisation crisis and is expected to grow at rates of close to 4% this and next year and somewhat faster in 2004. With the mentioned recovery of Poland, the observed differences in growth performance among acceding and among candidate countries are expected to diminish over the forecasting period; the difference