Eastern Europe: Slight Recovery Follows Deep Recession
The Vienna Institute for Comparative Economic Studies (WIIW) presents a survey of economic developments in Eastern Europe in 1993, with a forecast for 1994. Economic disparity among the regions east-central Europe, south-eastern Europe and the CIS became more pronounced in 1993. There are visible differences with respect to economic growth, inflation and progress with reforms to install market economy. Poland and Slovenia achieved GDP growth and falling inflation rates in 1993. A similar development is to be expected for Czechia and perhaps also for Hungary in 1994. Economic transformation shows first signs of success – in Poland, Hungary and Czechia more than half of the GDP originates from the private sector. The Czech economy has recovered from its separation from Slovakia and experienced dynamic growth in exports in 1993. In the case of Slovakia, the split from Czechia coupled with severe structural problems caused further decline in production and deficits in foreign trade, which will be impossible to overcome during 1994. Despite expected production growth in 1994, the prospects for sustained economic recovery in the leading reform countries are uncertain. Besides general problems such as the slow recovery of investments and structural weaknesses in production and banking, certain country-specific features can be discerned. The recovery of industrial production in Poland and Hungary generated high current account deficits but no problems of financing these deficits, partly because the inflow of foreign investments accelerated. However, Hungary's high level of internal and external indebtedness may become an obstacle to growth in the medium term. In Czechia the state budget and the current account are in surplus, the level of indebtedness is low, but structural change within enterprises lags behind because voucher privatization has led to a fragmentation of ownership functions, and the bankruptcy law is hardly ever applied. In south-eastern Europe recession slowed down, but the economic growth reported by Romania may have been unrealistic. Inflation remained high (Bulgaria +73 percent, Romania +256 percent), in Romania it was even rising, and important transformation steps were late. The two countries were also negatively affected by the UN embargo imposed on rump-Yugoslavia. With respect to Russia, and even more Ukraine, an end of economic decline and of hyperinflation is not in sight. In spite of its current account surpluses Russia is unable to service its foreign debts ($ 80 billion). The rapid privatization of enterprises, which were mostly taken over by their staff, did not improve efficiency and production keeps falling while unemployment remains low.
Leichte Erholung folgt einer schweren Rezession. Die Wirtschaft in den Oststaaten 1993/94; Eastern Europe: Slight Recovery Follows Deep Recession
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