Posted on February 2, 2015 by iMFdirect
By Plamen Iossifov and Jiri Podpiera
Inflation has been falling sharply across Europe since 2012 (see Charts 1 and 2). Across Central and Eastern Europe (CEE), inflation expectations have also drifted down especially among countries who peg their currencies to the euro (Bulgaria, Croatia, as well as Lithuania, which adopted the euro on January 1, 2015), but also in those that target their inflation rate (the Czech Republic, Hungary, Poland, and Romania).
The recent drop in world oil prices has re-ignited the debate about good vs. bad disinflation. For the euro area, risks from low inflation have been discussed in the March 2014 iMFdirect post. Our blog examines the causes and potential consequences of falling inflation from the perspective of EU countries outside the euro zone.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment, Politics, Reform | Tagged: Central Europe, commodiity prices, core inflation, Czech Republic, deflation, disinflation, eastern Europe, euro, euro zone, exchange rate, food prices, Hungary, inflation, oil prices, Poland, Romania, spillover, Sweden, unemployment | Leave a comment »
Posted on April 29, 2014 by iMFdirect
By Reza Moghadam, Aasim M. Husain, and Anna Ilyina
(Version in Türk)
Growth is gathering momentum in most of Central, Eastern, and South-Eastern Europe (CESEE) in the wake of the recovery in the euro area. Excluding the largest economies—Russia and Turkey—the IMF’s latest Regional Economic Issues report projects the region to grow 2.3 percent in 2014, almost twice last year’s pace. This is certainly good news.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: Albania, Austria, Belarus, Bosnia, Bulgaria, Central Europe, Croatia, Czech Republic, Estonia, euro area, Hungary, Kosovo, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Regional Economic Outlook: Europe, Romania, Russia, Serbia, Slovak Republic, Slovenia, spillovers, Turkey, U.S. Fed, Ukraine | Leave a comment »
Posted on January 28, 2014 by iMFdirect
By Christine Lagarde
(Version in Français and Español)
As we begin the new year, Europe confronts both good and bad news. First the good news. Growth is finally picking up in the euro area as it is slowly emerging from the deep recession. The bad news? Still nearly 20 million people are unemployed. Until the effects on employment have been reversed, we cannot say that the crisis is over.
Two trends are particularly troubling, now and for the future. First, the high level of long-term unemployment gives me great cause for concern: almost half of those without a job have been unemployed for more than a year. Second, I still worry about the large number of young people without jobs: nearly one quarter of Europeans under the age of 25 who are looking for a job cannot find one. In Italy and Portugal, more than one third of under-25s are unemployed, and in Spain and Greece more than one half are.
Filed under: Advanced Economies, Economic research, Employment, Europe, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: book launch, Christine Lagarde, Czech Republic, euro area, Europe, Germany, labor market, Slovakia, Spain, unemployment | Leave a comment »
Posted on June 13, 2012 by iMFdirect
By Bas Bakker and Christoph Klingen
With Western Europe’s banks under pressure, where does this leave Europe’s emerging economies and their financial systems that are dominated by subsidiaries of these very same banks? There is little doubt that the era of generous parent-funding for subsidiaries is over. But parent bank deleveraging—selling off assets, raising capital, and reducing loans, including to their subsidiaries—need not translate into a reduction of bank credit in emerging Europe.
A credit crunch can be avoided as long as parent banks reduce exposures gradually and domestic deposits, other banks, and local financial markets fill the void. Policymakers should create the conditions for this to happen.
The ties that bind
The dependence of the banking systems in emerging Europe on Western European banks is well known:
- Ownership— foreign banks control more than half of the banking systems in most of Central, Eastern, and Southeastern Europe. Their share exceeds 80 percent in Bosnia, the Czech Republic, Croatia, Estonia, Romania, and Slovakia. Only in Russia, Ukraine, Belarus, Moldova, Slovenia, and Turkey do they not dominate.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Europe, Finance, growth, IMF, International Monetary Fund | Tagged: balance of payments, bank deposits, bank resolution, bank supervisors, banks, Bas Bakker, Belarus, Bosnia, capital, Christoph Klingen, credit, crisis, Croatia, cross-border banks, Czech Republic, debt, deleveraging, deposits, eastern Europe, emerging economies, Estonia, Europe, European Central Bank, financial system, foreign banks, Hungary, IMF, liqudity, Moldova, non-performing loans, policymakers, Romania, Russia, Slovakia, Slovenia, subsidiaries, Turkey, Ukraine, Vienna 2.0 | 2 Comments »
Posted on February 24, 2010 by iMFdirect
By Marek Belka
(Version in ελληνικά)
Let’s think now about some of the lessons from the global economic crisis for Europe’s policymakers. In my previous five blogs, I’ve discussed the challenges faced by both advanced and emerging European economies as we emerge from the acute phase of the crisis. The questions I attempted to answer have included: In what shape and form will European integration survive the crisis? Will eastern Europe be able to sustain its remarkable catching up with living standards in western Europe?
For my final blog in this series on iMFdirect, I have decided to add a personal touch and draw on my experience as a former policymaker. So while this article builds on the previous five posts, it goes beyond them and includes some highly subjective comments on what lessons I believe the reformers in eastern Europe should take away from the crisis. And, although my primary focus is on countries outside the eurozone, it is clear that the eurozone will need to address long-term challenges, as I pointed out in my post After the Crisis, Much Still at Stake for Eurozone.
Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, growth, IMF | Tagged: banks, capital controls, capital flows, crisis lessons, Czech Republic, Estonia, eurozone, Marek Belka, Poland, Romania | 1 Comment »
Posted on February 10, 2010 by iMFdirect
By Marek Belka
As the deep recession in Europe’s emerging market countries finally comes to an end, the question on everyone’s minds is where growth in the region will come from in the years ahead. Exports are rebounding, and domestic demand is showing signs of stabilization. Most countries will see positive GDP growth this year—a stark difference from 2009. But a return to the high growth rates that preceded the crisis is highly unlikely.
An unbalanced picture
During the boom years, Eastern Europe grew rapidly, but growth in many countries was rather unbalanced. Capital inflows were large, but to a great extent went to the “non-tradable” sector—in particular, real estate, construction, and banking. Capital flows boosted domestic demand rather than supply—leading to a surge in imports, current account deficits that widened to unprecedented levels, and overheating economies.
This kind of growth will not come back. The domestic demand boom came to an end in the fall of 2008. In the global financial turmoil that followed the demise of Lehman Brothers, capital flows to Eastern Europe plunged, leading to a sharp decline in domestic demand. Further exacerbated by a decline in exports, this contributed a deep economic downturn—in the Baltics and Ukraine, GDP declined between 14 and 19 percent last year.
Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, growth, recession | Tagged: Baltics, banking, Bulgaria, capital flows, construction, Czech Republic, Estonia, exports, labor force, Latvia, Lithuania, real estate, Romania, Slovak Republic, Ukraine | Leave a comment »