OECD sees strong future for CEE four
Poland
The group believes economic growth will slow compared with last year, to 4.2 percent, but will then rebound in 2006 to 4.5 percent on the strength of an investment boom.
It also predicts that the budget deficit will narrow from 4.8 percent of GDP last year to 4.3 percent this year, but warns that a failure to keep spending in check could bring dire consequences.
"Public expenditure targets will need to be reinforced if medium-term fiscal sustainability is to be attained. Budgetary slippages could make the task of the central bank more difficult and could also trigger drastic consolidation measures," the report says.
Czech Republic
Growth should heat up this year to 4.1 percent and to 4.3 percent in 2006, from four percent last year, as "household consumption spending is likely to pick up." The OECD also encourages Prague to look beyond eurozone entry in implementing fiscal reform.
"Faster progress is needed in structural reforms to make fiscal consolidation sustainable in the longer term," it wrote.
Slovakia
Domestic demand will keep the Slovakian economy churning at a rate of 4.8 percent growth this year and 5.7 next year. Yet unemployment has remained frustratingly high at 17 percent, and the OECD sees no sign of a drop until H2 2006. The group warned that the economy could overheat, and that an overly-strong currency could slow growth.
"The plan to adopt the euro in January 2009 will remain credible only if strict adherence to planned expenditure cuts is achieved," the report said.
Hungary
Despite a slowdown during the second half of last year that hasn't yet run its course, the OECD expects growth to rebound in H2 of this year, on the back of increased export demand and investment activity, bringing growth to 3.6 percent for the year. Still, Hungary's aspirations to enter the eurozone on schedule are in danger, unless government spending is limited.
"Significant further progress is required to meet the 2010 target date for euro adoption. While falling inflation expectations leave scope for further monetary easing, this needs to be assisted by a strong commitment to fiscal consolidation."
The group believes economic growth will slow compared with last year, to 4.2 percent, but will then rebound in 2006 to 4.5 percent on the strength of an investment boom.
It also predicts that the budget deficit will narrow from 4.8 percent of GDP last year to 4.3 percent this year, but warns that a failure to keep spending in check could bring dire consequences.
"Public expenditure targets will need to be reinforced if medium-term fiscal sustainability is to be attained. Budgetary slippages could make the task of the central bank more difficult and could also trigger drastic consolidation measures," the report says.
Czech Republic
Growth should heat up this year to 4.1 percent and to 4.3 percent in 2006, from four percent last year, as "household consumption spending is likely to pick up." The OECD also encourages Prague to look beyond eurozone entry in implementing fiscal reform.
"Faster progress is needed in structural reforms to make fiscal consolidation sustainable in the longer term," it wrote.
Slovakia
Domestic demand will keep the Slovakian economy churning at a rate of 4.8 percent growth this year and 5.7 next year. Yet unemployment has remained frustratingly high at 17 percent, and the OECD sees no sign of a drop until H2 2006. The group warned that the economy could overheat, and that an overly-strong currency could slow growth.
"The plan to adopt the euro in January 2009 will remain credible only if strict adherence to planned expenditure cuts is achieved," the report said.
Hungary
Despite a slowdown during the second half of last year that hasn't yet run its course, the OECD expects growth to rebound in H2 of this year, on the back of increased export demand and investment activity, bringing growth to 3.6 percent for the year. Still, Hungary's aspirations to enter the eurozone on schedule are in danger, unless government spending is limited.
"Significant further progress is required to meet the 2010 target date for euro adoption. While falling inflation expectations leave scope for further monetary easing, this needs to be assisted by a strong commitment to fiscal consolidation."
