Transition economies show high growth figures

According to the European Bank for Reconstruction and
Development, the former Communist economies will continue
their rapid growth in 2004-2005, although many have developed
symptoms of “reform fatigue”.

The EU’s ten new member states, as well as many
other former Communist countries in Central Eastern
Europe and Central Asia have made “commendable
progress” over the past 15 years in their transition
to market economies and pluralist democracies, says the
latest Transition Report issued by the European Bank for
Reconstruction and Development (EBRD). At the same time,
several of the EU-10 states have developed symptoms of
“reform fatigue”, the report adds.

For the fourth year running, the economies of these
transition countries have been outpacing the world
economy, says the report, which was released on 8
November. Economic growth is expected by EBRD to be
highest in the Commonwealth of Independent States (CIS),
at 7.4%. This compares with an average of 5% in
South-Eastern Europe and 4.9% in Central Europe and the
Baltic states. For 2005, the EBRD forecasts the
region’s overall growth rate to reach 5.5%.

The bank’s projected growth figure for the Czech
Republic, Slovakia, Poland, Hungary, Slovenia and the
three Baltic states taken together is 4.9% for 2004,
compared with 3.7% in 2003. The Commission’s forecast
for the EU-25 is 2.5% for 2004.

Presenting the report, EBRD chief economist Willem
Buiter said that for most of the countries concerned
macroeconomic vulnerabilities remain, and that some of
the EU-10 states appear to have stopped or slowed down
work on their reforms. “Now that the goal [of EU
accession] has been achieved, the pace of reform seems to
have slowed, even though formidable institutional
challenges remain,” said Buiter. Remarkably,
most progress in market reform has been achieved by the
current EU candidate countries of Bulgaria, Croatia and
Romania.

According to the report, only the Czech Republic,
Estonia and Slovakia have improved their progress record,
in one category each, from the 2003 status.

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