布鲁盖尔-Whither-growth-in-central-and-eastern-Europe_-Policy-lessons-for-an-integrated-Europe_161页_2mb

Summary of "Whither growth in central and eastern Europe? Policy lessons for an integrated Europe"

Core Content

This report provides an in-depth analysis of the impact of the global financial and economic crisis on Central, Eastern and South-Eastern Europe (CESEE) countries, both inside and outside the European Union. It explores the pre-crisis development model of CESEE, the challenges posed by the crisis, and the policy lessons that can be drawn for future growth and integration.

Main Views

1. Pre-Crisis Development Model

• CESEE countries followed a unique development model based on deep integration with the EU, including political, institutional, trade, and financial integration.
• The model was characterised by massive capital inflows, high levels of foreign direct investment (FDI), and significant trade openness.
• Current account imbalances were common, especially in the Baltic-Balkan group, where deficits reached up to 15% of GDP.
• Labour mobility to EU15 countries was a key feature of the model, contributing to economic convergence with Western Europe.

2. Impact of the Crisis

• The crisis hit CESEE harder than other emerging economies, leading to sharp declines in output and slow recovery.
• The pre-crisis model was not crisis-proof, even for countries that had maintained macroeconomic stability.
• The Baltic-Balkan group suffered more severe and prolonged effects due to their unsustainable growth trajectories and high current account deficits.

3. Policy Lessons and Recommendations

• The pre-crisis model should be preserved but reformed to address its shortcomings.
• Exchange-rate policies played a crucial role in both the unsustainable developments and the crisis response.
• Financial stability was affected by cross-border bank holdings and credit booms, requiring more conservative financial regulation.
• Fiscal sustainability is more promising than previously thought, though pro-cyclical fiscal policies are not advisable.
• Supply-side reforms and improving competitiveness are essential for future growth.
• The EU framework must be strengthened to support sustainable integration and catching-up processes.

Key Information

• CESEE countries experienced higher capital inflows compared to other emerging regions, which contributed to economic growth but also vulnerabilities.
• The growth model was diverse across CESEE, with two main variants:
  • Central European EU members (CE5): Generally had stable trade balances and sustainable growth.
  • Baltic and Balkan EU members (BB5) and Western Balkan EU candidate countries (WB6): Had worsening trade balances and unsustainable growth.
• FDI was a major driver of growth in CESEE, but its composition was not always positive.
• The report recommends:
  • Reorienting the growth model to focus on sustainable and competitive development.
  • EU-level surveillance to ensure coherent and effective policies.
  • National reforms to improve fiscal sustainability, financial regulation, and exchange-rate policies.

Policy Areas Examined

1. Exchange-Rate Regimes and Euro Adoption

• CESEE countries have adopted diverse exchange-rate regimes, with floating regimes and fixed regimes coexisting.
• The crisis exposed the fragility of some exchange-rate regimes, particularly those with high current account deficits.
• EU surveillance is recommended to support sustainable convergence and euro adoption.

2. Financial Stability

• Cross-border bank ownership and credit booms contributed to financial instability.
• The report highlights the need for deleveraging, credit resumption, and liquidity management.
• Financial regulation must be strengthened to prevent future credit crises.

3. Fiscal Sustainability

• Fiscal reforms are essential for long-term stability.
• While public debt levels were high, the report is cautiously optimistic about fiscal sustainability.
• Pro-cyclical fiscal policies are discouraged, as they may exacerbate economic downturns.

Conclusion

• The CESEE development model has been fundamentally challenged by the crisis, but it should be revived and reformed.
• EU integration remains a key factor in economic growth, but national policies must be improved to ensure sustainable development.
• The report suggests that strategic reforms at both national and EU levels are necessary to reorient the growth model and ensure lasting economic success.

Annex and References

• The report includes country groupings and data sources, primarily from the IMF and EBRD.
• It references academic and policy discussions on financial stability, fiscal policy, and EU integration.

Authors and Contributors

• The report is authored by a group of leading economists from various European institutions.
• Bruegel and wiw collaborated to form the expert group.
• The report benefited from contributions by several researchers and institutions, including the Austrian Ministry of Finance and CEPR.

Final Note

• The report calls for a balanced and sustainable approach to growth and integration.
• It emphasises the importance of national policy quality and the EU framework in shaping economic outcomes.