Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 ESTONIA: 5 years in the EU Conference 30 April 2009 Estonian National Library, Tallinn 5 Years of an Enlarged EU * Filip Keereman (Head of unit ECFIN.G.3)

Similar presentations


Presentation on theme: "1 ESTONIA: 5 years in the EU Conference 30 April 2009 Estonian National Library, Tallinn 5 Years of an Enlarged EU * Filip Keereman (Head of unit ECFIN.G.3)"— Presentation transcript:

1

2 1 ESTONIA: 5 years in the EU Conference 30 April 2009 Estonian National Library, Tallinn 5 Years of an Enlarged EU * Filip Keereman (Head of unit ECFIN.G.3) * Prepared with the help of Rajko Vodovnik

3 2 Economic Achievements –NMS –OMS –EU as a whole Growth drivers Challenges Ahead Interlinkages and Outlook Economics Policies for Addressing Challenges Conclusion Outline

4 3 Five years of an enlarged EU Workshop in November 2008, Economic Papers: htm Report on the ECFIN web site : on_summary14081_en.htm on_summary14081_en.htm Conference in Prague, March Informal ECOFIN, 3-4 April, Council Conclusions 4-5 May

5 4 Economic Achievements – NMS: Considerable catching-up and improved living standards ?

6 5 Estonia: Income was 37% of OMS income in 1999; increased to 60% in Yearly average of exports of goods and services before enlargement, : EUR 5.2 bn; average yearly growth rate: 10.9% after enlargement, : EUR 10.0 bn; average yearly growth rate: 15.2% new jobs have been created after the enlargement Unemployment rate: 1998: 9.2% 2008: 5.5%

7 6 New Member States have benefited from improved employment opportunities at home and abroad At present juncture: concerns about return migrants replaced brain drain Mobility rates by sending country, 2007Workers’ remittances: not negligible in some countries

8 7 Economic Achievements – OMS: Old Member States with strongest ties to new benefited most FDI stocks in the new Member States and economic growth of selected old Member States Trade with the new Member States and economic growth of the old Member States

9 8 Overall, smooth labour market developments Recent intra and extra EU movers and the resident populationMigration: UK top destination

10 9 New investment and export opportunities for old Member States, securing jobs and growth at home Increased trade growth of old Member States after the 2004 enlargement compared to the preceding five-year period The old Member States run a trade surplus with the new Member States Benefiting from complementarities: EU wide production networks are more competitive and increasing trade in intermediate goods Specialisation risk can be “insured” with trade in assets, specifically acquiring ownership of foreign enterprises

11 10 Economic Achievements – EU as a whole: Has enlargement from 15 to 27 countries strengthened the EU?Opinions on enlargement 2008

12 11 Growth drivers: Institutional convergence Note: Ease of Doing Business: the lower, the more favourable; adjusted for changes in the sample, so that data cannot only be compared between countries, but also through time; Index of Economic Freedom (between 0 and 100): the higher, the better; Corruption Perception Index (between 0 to 10): the higher, the lower corruption; "Other developing economies": 16 countries with an income level similar to that in the new Member States (Argentina, Botswana, Chile, Costa Rica, Croatia, Lebanon, Malaysia, Mauritius, Mexico, Oman, Panama, Palau, South Africa, Turkey, Uruguay and Venezuela) classified as "upper middle income by the World Bank.

13 12 New product market regulation (more competition, less state aid) Total state aid Perceived development of competition

14 13 Increasing trade integration Geographical destination of exports of new and old Member States

15 14 Geographical destination of exports of Estonia

16 15 Trade balance of Estonia in

17 16 Large degree of openness of NMS Market integration in the new Member States

18 17 Rapid economic modernization, e.g. increased knowledge intensity Exports of high technology products

19 18 Export market shares of new and old Member States

20 19 Export market share after EU accession (extra-EU)

21 20 Strong investments inflows Inward FDI in the new and old Member States

22 21 Inward FDI in the new Member States and Estonia according to its origin

23 22 The ease of doing business and FDI in the EU Member States

24 23 Cohesion policy implementation Net EU transfers and GDP per capita in 2007GDP effects of Cohesion & Structural Fund programmes

25 24 Challenges Ahead: Strong dependence of some NMS on foreign loans Strong vulnerability of some OMS vis-à-vis NMS External loans of BIS reporting banks in 2004 and 2008 Claims of selected old Member States on new Member States,

26 25 Macro-financial vulnerabilities: Financial over- exuberance threatens catching-up achieved

27 26 Interlinkages and Outlook Different sectoral links can be indentified Sectoral contribution to growth in selected regions

28 27 Increased business cycle synchronisation between new and old Member States aggregate

29 28 Strong correlation also in high frequency data Monthly Production Index yoy changeIndustrial Confidence Indicator, monthly

30 29 …but there are country difference Monthly Production Index yoy changeIndustrial Confidence Indicator, monthly

31 30 Structural differences in production structure Output composition in nominal terms Latest PL data from 2005, LV+LT from 2006

32 31 Q on Q GDP growth and industrial confidence indicator, 2008

33 32 A halt in the catching-up is forecast: will it be temporary ?

34 33 Policies to Address Challenges Fiscal policy and SGP Lisbon Strategy Enhanced country surveillance EU cohesion policies EU financial institutions: European Investment Bank, European Bank for Reconstruction and Development Balance-of-Payments Facility Policy advise Financial support

35 34 EU cohesion policies Regional distribution of EU transfers, Note: EAGF : preallocated direct payments only, excluding market expenditure Estonia: Fin. Perspectives : 4.9% of GDP on average per year (EUR 0.8 bn, 2008 prices); in net terms 3.9% of GDP (after contribution to EU budget) 2007: 2% of GDP (EUR 0.3bn, 2008 prices) in net terms

36 35 EU financial institutions: EIB and EBRD step up lending in framework in of EERP European Investment Bank EIB: + EUR 15 bn per year in up to almost EUR 70 bn per year in EU, pre- accession and neigbourhood Of which about EUR 12 bn in NMS per year (increase by EUR 2.5 bn per year) Focus on SME (via commercial banks) up to EUR 7.5 bn per year (+ 50%) Focus on energy, climate change, infrastructure

37 36 European Bank for Reconstruction and Development Increased lending capacity by 20% to EUR 7 bn 2009 Target financial sector in emerging Europa (and Asia) Special attention for trade: Trade Facilitation Programme (+ 1.5 bn to guarantee to traded “Vienna Initiative” (February 2009): EIB, EBRD, World Bank Group EUR 24.5 bn for Eastern Europe in Co-ordinated financial assistance (equity, debt finance, credit lines) via banks to support lending in particular SME

38 37 EU balance of payments assistance Context (contribution to multilateral effort) EU: facility increased from EUR 12 in 1988 when the instrument was created to EUR 25 bn in December 2008 and to EUR 50 bn (Commission proposal, April 2009 – Council adoption, May 2009) Programme based (about 2 years); disbursement in several instalments on respect of conditionality EU uses its AAA rating to borrow in the market and on-lends to Member State without costs Loan to be reimbursed in about 5 years Hungary: 4 November 2008 Council Decision EUR 6.5 bn, in total EUR 20 bn (12.5 from IMF; 1.0 from WB) First instalment: EUR 2 bn (December 2008) Programme adapted in light of worse economic situation Second instalment: EUR 2 bn (March 2008)

39 38 Latvia: 20 January 2009 Council Decision EUR 3.1 bn, in total EUR 7.5 bn (1.7 from IMF; 0.4 from WB; 1.9 from SE, DK, NO, EE; 0.4 from EBRD, PL, CZ) First instalment: EUR 1 bn (February 2008) Programme adapted in light of worse economic situation Romania: 21 April 2009 Commission proposal EUR 5 bn, in total EUR 20 (13 from IMF, 1.0 from WB, 1.0 from EIB, EBRD) Council adoption planned for 5 May 2009

40 39 Conclusion Enlargement has been a great success for all Member States. However, the achievements cannot be taken for granted: further reforms are essential to maintain them and ensure continued integration and income convergence in the EU. The current crisis may not only pose challenges but also offer opportunities for implementing deep growth-enhancing reforms.


Download ppt "1 ESTONIA: 5 years in the EU Conference 30 April 2009 Estonian National Library, Tallinn 5 Years of an Enlarged EU * Filip Keereman (Head of unit ECFIN.G.3)"

Similar presentations


Ads by Google