Conjoncture, des perspectives solides pour 2004

L’accélération de la croissance dans les pays de la zone élargissement se confirme, ce qui conduit à relever légèrement les prévisions pour 2004, alors que celles des actuels pays membres sont plutôt revues à la baisse.

There is an economic rebound, even without the support of the Western economies

• After losing ground during 2001, growth reached a low point during Q1-2002 before improving steadily (an average of 2.7% in 2001, 2.8% in 2002 and 3.7% in 2003). The upturn in Poland (whose GDP accounts for more than 1/3 of the AC-10) had a major effect on the total growth. Nevertheless, at the end of the year a surge in activity, even though sometimes quite slight, was recorded for all the countries.
• With an average growth rate of 3.7% last year, compared with 0.8% in the EU-15, the catching up process has continued at a faster pace (2.9 pp compared with 1.8 in 2002). However, the picture is not uniform: despite a slowdown in Estonia, the Baltic States still experienced rapid growth, and also Romania, Bulgaria and Slovakia; although the rebound is confirmed in Poland, with a sharp upturn in industrial production (+18.4% in February y/y), in relation to these, growth seems to lack momentum in Hungary, the Czech Republic, Slovenia, and especially in Cyprus and Malta where the tourism sector recorded poor results.
• The CEE countries should capitalise on this solid performance in 2004 and therefore grow by an average of more than 4%. Exports should gradually accelerate, even though prospects for the EU-15 seem less favourable now than they were 6 months ago. Within this context, convergence should continue at a dynamic pace (with a gap of about 2 pp with the EU-15 in the growth rate).

Private consumption: still the main engine of growth

• As in 2002, private consumption was the main engine of growth in 2003, except for Slovakia where the purchasing power of households was drastically curtailed by the sharp rise in inflation. Indeed, private consumption, fuelled by the rise in real wages (5.5% in the Czech Republic for example.) but also by falling interest rates and a strong expansion in consumer credit, rose by more than 5% in the majority of the AC-10, . On the other hand, investment trends differed from country to country. Investment spending was generally steady in countries experiencing strong growth (Baltic States, Bulgaria and Romania). Investment decreased again in Poland *, however at a much slower pace than in 2001 and in 2002, and also in Slovakia, where it used to be the highest in the region.
• Poland and Slovakia were the only countries in which foreign trade made a positive contribution to growth. Elsewhere, the deterioration of the external balance had been slowed down by favourable changes in the euro-dollar parity, which partly offset the increase in the price of oil. However, high trade deficits (Baltic States, Romania, Bulgaria, and, since 2003, Hungary) can only be significantly reduced with a return to economic growth in the EU-15.
• Last, but not least, it should be recalled that, in several countries, the current political situation could be responsible for the delay in taking decisions: the dismissal of the Lithuanian president, the defeat of the government candidate in the presidential election in Slovakia, the resignation (as from 2 nd May) of Poland’s Prime Minister with the prospect of Parliamentary turmoil.

* In Poland, the down turn in investment was particularly abrupt owing to an over-accumulation in the services sector and high real interest rates until 2003. In 2004, an improvement in the financial situation of the corporate sector together with a high rate of capacity use could well result in an increase in Fixed Capital Formation

For more analyses, see theenlargement website of DREE.