No. 40, Zoltán Ákos Kovács (1996): Recent evidence and prospects for growth in Central-Eastern Europe

The aim of this paper is to scrutinise recent macroeconomic developments in the so-called Visegrád states (i.e. the Czech Republic, Hungary, Poland, Slovakia and most recently Slovenia). The overview of economic developments of the past some years will be supplemented by short-term forecasts up to 1997. Although some medium-term prognoses both of national and foreign origin have already been issues for some countries, most forecasts have undertaken to draw on only short-term perspectives. Because of well-known uncertainties surrounding the external environment, long-term growth potential of the national economies as well as the political risks stemming from any major change in the policy line, we have also seen it more useful our projections to be confined to the following some years. Following the period of decline, in recent years all the Visegrád countries have already stepped upon a growth track, although the pace of recovery differs widely among countries. Beside some impressive macroeconomic indicators (e.g. usually high GDP growth rates, slackening inflation, vivid investment activity etc.), several problems have remained (e.g. widening trade deficits in most countries, usually slow development in enterprise restructuring and institutional reform) that may shade future prospects. Thus the question inevitably arises whether the long-awaited growth trend that has recently commenced in Central-Eastern Europe can be considered as a sustainable one in the longer run. In the following chapters an attempt will be made to pick up the most relevant factors both which support our hypothesis and those which oppose it. There are some general trends that are characterising every country, or at least almost all of them, however, owing to several country specific factors the distinction among the countries seems useful. Chapter 1 contains a regional comparison of recent economic performance of the Visegrád countries while Chapter 2 does follow a more country-specific approach with separate forecasts on the individual countries.

Project leader:
Zoltán Ákos Kovács