Eastern economies on the rise

For the third consecutive year post-communist countries in Europe have recorded strong economic growth. This is according to New Europe. Report on Transformation prepared for the 16th Economic Forum in Krynica under the supervision of Dariusz Rosati, MEP.

The report covers 27 countries in Central and Southeastern Europe as well as former Soviet Republics. The GDP in the region grew by five to 5.5 percent on average, far above the world average. However,  growth was much faster in the Commonwealth of Independent States (CIS) than in CEE. The economic boost in CEE was due to the expansion of exports to EU markets as well as the inflow of structural funds. CIS countries benefited from high demand for oil and raw materials. "In all the 27 countries covered by the report we could observe a high rate of economic growth. On the other hand, we are witnessing growing political tensions. Paradoxically, while the economic situation of the region is improving, many countries underwent political reshuffles due to reform fatigue," Rosati said.

"Another strong tendency is the emerging division of the countries into two groups. While CEE countries opt for EU integration and democratic reforms, the CIS group adopts a different political model - that of the presidential or authoritarian state, facing to the East in their foreign policy," Rosati added.

Poor presentation

When it comes to the CEE region and the new members of the EU, it was the Baltic states that posted the largest GDP growth. Estonia's GDP growth improved from 7.8 percent in 2004 to 9.6 percent in 2005, while in Latvia the shift was from 8.3 percent to 10.2 y-o-y. With a mere 3.2 percent growth, Poland was among the poorest performers.

"Poland is still the last country not to have set a date for euro adoption and it is still on the shameful first place in the EU when it comes to the unemployment rate," Rosati said. PO's Hanna Gronkiewicz-Waltz stressed, however, the success of low inflation in Poland, but also in Slovakia and Hungary. "We have an inflation level characteristic of mature market economies. It provides predictability for businesses and consumers," Gronkiewicz-Waltz said.