CEE leads the European growth pack
If not for Ireland, Finland and Luxembourg, the growth among Eurozone countries would have dropped below two percent last year.
The tigers of the old EU will not roar to the community's rescue this year, however, as a recent report from the European Commission states GDP will increase by just 1.6 percent. According to the economic forecast, soaring oil prices and a strong euro is dampening economic activity.
However this is not the case in Poland and other new member states from Central Europe.
With almost no exception, eastern economies are forecasted to accelerate at a rate above four percent year-on-year until 2007. The Baltic States lead the pack, set to grow by more than six percent in this year and the next, with a record high result for Latvia (which grew 8.5 percent last year). Given strong macro-economic foundations and budget deficits that already meet convergence requirements, Poland's northern ex-soviet neighbors will be the first of the new EU members to enter the eurozone, probably accessing in two years time.
As for Poland, its budget deficit remains a burning issue. The Commission doubts that the Polish government will meet the set goals of 3.9 percent in 2005 and 3.2 percent in 2006. According to Brussels' economists the country will exceed the plan by 0.5 percent and 0.6 percent respectively, threatening the euro convergence process, which the government hopes to finalize in 2009.
However, a strict budgetary regime may be easier to maintain in the wake of the country's strong GDP growth forecasts, set at 4.4 percent this year and 4.5 percent in 2006.
"The forecasts for this year and for 2006 rely on stronger domestic demand and, especially, a sustained acceleration in investment," the European Commission report spells out. Despite that, unemployment in Poland, reaching 18.8 percent last year, is predicted to decrease slowly, estimated at 17.6 percent in 2006.
Unemployment in neighboring Slovakia will decrease at a much faster rate, from 18 percent last year to 16.8 percent after two years. This worrying data comes amidst a general view that the EU economy will generate some three million new jobs in two years.
However, the economists from the Commission write: "[This is] leading only to a modest decline in unemployment." Put in a larger picture with Asia and the US, Europe still lacks competitiveness, despite new member's impressive dynamics.
The tigers of the old EU will not roar to the community's rescue this year, however, as a recent report from the European Commission states GDP will increase by just 1.6 percent. According to the economic forecast, soaring oil prices and a strong euro is dampening economic activity.
However this is not the case in Poland and other new member states from Central Europe.
With almost no exception, eastern economies are forecasted to accelerate at a rate above four percent year-on-year until 2007. The Baltic States lead the pack, set to grow by more than six percent in this year and the next, with a record high result for Latvia (which grew 8.5 percent last year). Given strong macro-economic foundations and budget deficits that already meet convergence requirements, Poland's northern ex-soviet neighbors will be the first of the new EU members to enter the eurozone, probably accessing in two years time.
As for Poland, its budget deficit remains a burning issue. The Commission doubts that the Polish government will meet the set goals of 3.9 percent in 2005 and 3.2 percent in 2006. According to Brussels' economists the country will exceed the plan by 0.5 percent and 0.6 percent respectively, threatening the euro convergence process, which the government hopes to finalize in 2009.
However, a strict budgetary regime may be easier to maintain in the wake of the country's strong GDP growth forecasts, set at 4.4 percent this year and 4.5 percent in 2006.
"The forecasts for this year and for 2006 rely on stronger domestic demand and, especially, a sustained acceleration in investment," the European Commission report spells out. Despite that, unemployment in Poland, reaching 18.8 percent last year, is predicted to decrease slowly, estimated at 17.6 percent in 2006.
Unemployment in neighboring Slovakia will decrease at a much faster rate, from 18 percent last year to 16.8 percent after two years. This worrying data comes amidst a general view that the EU economy will generate some three million new jobs in two years.
However, the economists from the Commission write: "[This is] leading only to a modest decline in unemployment." Put in a larger picture with Asia and the US, Europe still lacks competitiveness, despite new member's impressive dynamics.
