The economic performance of the CEECs in 2003 was dominated by a clear convergence pattern: On the one hand, growth in the "new" EU countries of Central and Eastern Europe has accelerated, which greatly helped converge their per capita incomes towards those of the EU 15. In all these countries, with the exception of Latvia and Lithuania, real GDP has already surpassed its pre-transformation level. A further boost is expected to come from the gradual recovery in the EU 15 (inducing greater demand for imports from the new EU countries), but also from a rise in domestic investment, especially in Poland and the Czech Republic. Only Latvia and Lithuania, which recorded extremely high growth rates in 2003, are likely to slow down slightly. For the region as a whole, wiiw expects real GDP growth to accelerate from 3.7 percent in 2003 to 4.2 percent in 2004 and 4.4 percent in 2005. However, at least in the short and medium run these countries will face problems in meeting the Maastricht criteria for joining the European Currency Union. Many will find it difficult to reduce their large fiscal deficits, whereas inflation will be fuelled by the upward adjustment of indirect taxes and tariffs in the wake of EU accession, as well as by real-term convergence towards the EU 15.
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