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Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies www.wiiw.ac.at Balkan Endgame and Economic.

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Presentation on theme: "Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies www.wiiw.ac.at Balkan Endgame and Economic."— Presentation transcript:

1 Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies www.wiiw.ac.at Balkan Endgame and Economic Transformation Vladimir Gligorov

2 2 Contents > The game > International actors > Emerging economic region > EU prospects

3 3 The game > The choice was: > to democratize and negotiate a proper federal structure, or > take control over the party and the army and either –centralise Serbia and then Yugoslavia, or –integrate Serbian lands.

4 4 International environment > American authority, > European Union conditional promise of integration, > regional normalization, and > UN cooperation.

5 5 Economic transformation > Relatively fast and sustained growth based on growth of productivity, i.e., on increased efficiency and not on growth of employment. > High and sustained inflow of foreign investment due to relatively fast decrease of risks due to political stability, institutional change and the prospect of EU integration. > Delayed restructuring of the public sector and recurrent fiscal problems.

6 6 Balkan specifics > Slow reindustrialization > High external imbalances > Distorted labour market

7 7 Balkan specifics > Macroeconomic stability not really a problem, at least when it comes to inflation > Exchange rate stability not a problem > Fiscal prudence

8 8 Real GDP growth in NMS-5 and SEEC 1990 = 100

9 9 Annual GDP growth rates change in % against preceding year

10 10 2004200520062007 wiiw forecast Bulgaria5.65.55.35 Croatia 3.83.93.73.8 Romania8.44.14.5 Turkey8.95.866 Albania6.75.5 6 Bosnia and Herzegovina6.06.566 Macedonia4.13.644 Montenegro3.74.055 Serbia9.36.554 GDP real change in % against previous year

11 11 Industrial production in South Eastern Europe (1990 = 100)

12 12 Gross industrial production in NMS-5 and SEEC year on year, growth in %, 3-month moving average

13 13 Labour productivity in industry in SEEC and NMS-5, 1990 = 100 Note: CS data 2005 Serbia only.

14 14 Exports per capita in NMS-5 and SEEC in EUR (goods trade only)

15 15 FDI stock per capita in NMS-5 and SEEC 1990-2005, EUR

16 16 FDI, exports and balances > FDI increasing but not dramatically > Exports growing > Level low > Deficits high > Comparative advantages in labor or resource intensive sectors

17 17 FDI stock per capita in NMS-5 and SEEC EUR

18 18 Foreign trade: Exports cumulated period, annual change in % 27.3.06 AL, BA: Data refer to bolance of payment statistic.

19 19 Foreign trade: Imports cumulated period, annual change in % 27.3.06 AL, BA: Data refer to bolance of payment statistic.

20 20 Trade balance (commodities) in % of GDP in SEEC and NMS-5 2005 customs statics Note: Montenegro Data refer to 2003

21 21 Current account in % of GDP in NMS-5 and SEEC 2005

22 22 Private transfers in SEE % GDP

23 23 Average monthly gross wages in industry, EUR (ER), in SEEC and NMS-5 Note: RO net wages, Serbia data 2000 refer to 2001, Montenegro 2005 data refer to 2003

24 24 Labor market > Employment low > Unemployment high > Shadow economy significant

25 25 Employment in NMS-5 and SEEC 1990 = 100 1996=100

26 26 Employment in SEEC and NMS-5 1990 = 100 1996=100

27 27 Unemployment Rates, 2000, 2005 in % of labour force, average, LFS Note: Albania, registration data, end of period

28 28 Policy responses > Fiscal policy prudent > Monetary policy the main instrument > Credit controls not the proper instrument

29 29 General government budget % of GDP 27.3.06 Montenegro: Central budget.

30 30 Consumer price inflation, 2000-2007 change in % against preceeding year 27.3.06

31 31 2004200520062007 Prognose Bulgarien6.15.085 Rumänien11.99.08.58.0 Kroatien2.13.33.53 Mazedonien-0.40.533 Türkei8.68.29.06.0 Albanien3.02.42.52 Bosnien und Herzegowina0.72.964 Montenegro2.42.333 Serbien11.416.215 Verbraucherpreise Veränderungen gegen das Vorjahr in % Quelle: wiiw-Jahresdatenbank, Prognosen: wiiw, Juli 2006.

32 32 Current account and gross external debt in % of GDP Current account Gross external debt 27.3.06

33 33 Share of total foreign debt in GDP, 2000-2005 in % 27.3.06

34 34 Anteil der privaten an der gesamten Auslandsverschuldung, 2000-2006 in % Quelle: Nationalbank des jeweiligen Landes.

35 35 Reale Wechselkurse, 2003-2006 (EUR per NCU, VPI-deflationiert, Veränderung gegenüber Vorjahr) Anmerkung: Ansteigende Linie bedeutet reale Aufwertung. Quelle: wiiw-Monatsdatenbank, nationale Statistiken.

36 36 Leitzinssätze, 2000-2006 nominell in % p.a. Quelle: Nationalbank des jeweiligen Landes.

37 37 Bank credit to the private sector, 2002-04 Sources: IMF, International Financial Statistics; national data; BIS estimates. 37 38 28 18 20 16 10 12 5 3 2 34 13 0 50 100 150 200 250 300 CSROBGTRALHUBAHRSIMKPLSKCZEUR 0 5 10 15 20 25 30 35 40 45 Nominal growth (cumulative, in percent) (lhs)Real growth (compound rate, % per year) (rhs)

38 38 Bank credit to the private sector, 2000-04 (increase in percent of GDP, annual average) Sources: National data; BIS estimates.

39 39 Real growth of credit, 2003-04 (cumulative growth rate, in percent) BG RO BA CS AL SI TR HU MK HR CZ PL SK -15 5 25 45 65 85 Enterprises RO CS BG AL TR MK HU BA SKCZ HR SI PL 0 50 100 150 200 250 300 Households Source: National data; BIS estimates.

40 40 Source: IMF; BIS estimates. Commercial bank liabilities, 2002-04 (annual pct change, quarterly average ) Time, savings and foreign currency deposits Foreign liabilities -20 0 20 40 60 80 100 ROBGSKHRSIHUPLTRMKCZ

41 41 Capital controls Quantitative restrictions Reserve requirements Albania 10% Bosnia and Herzegovina 15% Bulgaria 23% per year increasing after the limit Croatia 17 % to 55% (marginal) Macedonia 10% Montenegro 23% Romania 35% to increase to 40% Serbia 18% to 38% on foreign currency

42 42 Western Balkan free trade area > Free trade area from January 1, 2007 > The area is small and the intra-regional trade is segmented > Distortions through different trade regimes with the EU and the rest of the world

43 43 SEE trade: exports as % of total (2004) percentage point change in shares 2001-2004 * EU-4 = Austria, Germany, Greece, Italy.

44 44 SEE trade: imports as % of total (2004) percentage point change in shares 2001-2004 * EU-4 = Austria, Germany, Greece, Italy.

45 45 Exportanteile 2005 Veränderung der Anteile in Prozentpunkten, 2001-2005 von: ALB B&H BUL CRO MAC ROM S&M RUS nach: Albanien 0.1 - 0.0 0.4 0.0 Bosnien und Herzegowina 0.0 -0.1 2.3 -0.3 0.1 5.0 0.0 Gesamtveränderung, Mrd. USD 0.4 1.4 5.9 4.4 0.8 14.4 1.9 153.6 * EU-4 = AUT, GER, GRE, ITA. Quelle: IMF Direction of Trade Statistics.

46 46 Importanteile 2005 Veränderung der Anteile in Prozentpunkten, 2001-2005 * EU-4 = AUT, GER, GRE, ITA Quelle: IMF Direction of Trade Statistics.

47 47 Political challenges > Unfinished process of disintegration > Montenegro referendum > Kosovo negotiations > Bosnia and Herzegovina connection > Regional integration

48 48 Stability > Inflation speeding up > Real exchange rates apreciating > Policies mainly prudent

49 49 EU prospects > The Hague Tribunal > Stabilization and Association Agreement > Democratization > Threat of populism

50 50 SEE EU accession forecast SAANegotiationsEUeuro Bulgaria Romania Croatia Macedonia Albania Bosnia and Herzegovina Serbia Montenegro Kosovo 1995 (EAA) 2005 2004 2007 1999 2005 2007 2010....... 2007 2010 2012-2013 by 2015 after 2015 2009 2012 2015 by 2017 since 2002


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