The report, which covers the eight central and eastern European countries that joined the EU in 2004 as well as Romania and Bulgaria, which joined in 2007, warns that even though growth has gained pace in 2006, it is likely to cool down in 2007.
The document published on 31 May 2007, spells out a clear warning of inflationary pressures, which the report says is "mounting in several countries in the region. Inflation is rising rapidly in the Baltic countries, especially Latvia, and also on an upward trend in Poland and the Czech Republic. In Hungary inflation has been spurred by large administered price increases."
"Most countries in the region are not taking adequate advantage of the strong growth to improve public finances," said Thomas Blatt Laurensen, the report's lead author at the World Bank. He added: "Reform momentum in the region has generally waned owing to post-accession reform fatigue, unstable political situations, and weak administrative capacity."
The report also notes that thanks to the Common Agricultural Policy (CAP), EU accession has led to a "substantial increase in agricultural income" in the ten new eastern and central European member states. However, the report finds large differences in income growth, as well as agricultural structures, and that labour productivity lags far behind the EU15 average.
"EU8+2 agriculture and rural development challenges cannot be addressed by agricultural policy alone," the report concludes, calling for sector restructuring and non-agricultural support policies.
