Advanced Search
MyIDEAS: Login to save this paper or follow this series

Weathering the Global Storm, yet Rising Costs and Labour Shortages May Dampen Domestic Growth


Author Info

  • Vasily Astrov

    (The Vienna Institute for International Economic Studies, wiiw)

  • Vladimir Gligorov

    (The Vienna Institute for International Economic Studies, wiiw)

  • Peter Havlik

    (The Vienna Institute for International Economic Studies, wiiw)

  • Mario Holzner

    (The Vienna Institute for International Economic Studies, wiiw)

  • Gabor Hunya

    (The Vienna Institute for International Economic Studies, wiiw)

  • Sebastian Leitner

    (The Vienna Institute for International Economic Studies, wiiw)

  • Zdenek Lukas
  • Anton Mihailov
  • Olga Pindyuk

    (The Vienna Institute for International Economic Studies, wiiw)

  • Leon Podkaminer

    (The Vienna Institute for International Economic Studies, wiiw)

  • Josef Pöschl
  • Sandor Richter

    (The Vienna Institute for International Economic Studies, wiiw)

  • Waltraut Urban
  • Hermine Vidovic

    (The Vienna Institute for International Economic Studies, wiiw)


The Vienna Institute for International Economic Studies (wiiw) has just released an analysis of current economic developments in Central, East and Southeast Europe, Kazakhstan, Russia, Ukraine and China (including brief country reports), as well as a medium-term forecast for these countries in the period 2008 2010. A special section investigates labour market developments and the vulnerability of financial markets in individual countries. The majority of the new EU member states (NMS) have been enjoying a period of robust economic growth. The current turbulence on global financial markets is not going to hurt directly or seriously. Even the possible indirect effects should not be too severe. GDP growth is projected to slow down from about 6% in 2007 to some 5% per year over the period 2008 2010. Inflation will gradually decline, yet in most NMS it will stay above that of the eurozone. Economic growth will be mainly driven by rising consumption (supported by rising labour incomes) and by investments. The latter will be bolstered by much higher transfers from the EU budget. Except for Bulgaria, Romania and the Baltic States, all of which remain vulnerable to external shocks, current account deficits will not be excessively high. In sum, the NMS are expected to remain a region displaying dynamic growth in the years to come, maintaining their competitive advantages as attractive locations for both trading and investment purposes. The situation on the labour market has improved dramatically, unemployment has declined rapidly. The economic growth is no longer 'jobless'. On the contrary, most countries in the region are now reporting labour shortages - especially of skilled workers - which could well become a serious constraint on economic growth. After a slight dip in growth in 2008, wiiw expects the Southeast European region to enjoy faster GDP growth in 2009 and 2010 of up to 6%. Remittances and a credit boom will continue to fuel the core growth driver domestic demand. Strong investment growth and incipient re industrialization go hand in hand with an increase in employment. Stable competitive performance (except for Serbia and Turkey) will also provide a better environment for stronger export growth. Nevertheless, the net export position is still unfavourable for want of FDI and technology transfer. The slowdown in global growth, the hikes in oil, metal and food prices on world markets, as well as the subprime crisis are expected to have only a minor impact on the region. However, Serbia's unbalanced growth path in the wake of the Kosovo crisis poses a regional risk. Prospects of EU accession have improved for all countries, except Turkey. Kazakhstan, Russia and Ukraine are all expected to grow by more than 6% per year in the period 2008 2010 - also slightly slower than in the previous two years. A modest cooling down of growth is projected for China as well. This forecast starts a new series with the title ¿Current Analyses and Forecasts¿. It contains an appendix with selected indicators of competitiveness.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
File Function: Order URL / Description
Download Restriction: Only to order

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Forecast Reports with number 1.

as in new window
Length: 151 pages including 51 Tables and 20 Figures
Date of creation: Feb 2008
Date of revision:
Publication status: Published as wiiw Current Analyses and Forecasts
Handle: RePEc:wii:fpaper:fc:1

Contact details of provider:
Postal: Rahlgasse 3, A-1060 Vienna
Phone: (+43-1) 533 66 10
Fax: (+43-1) 533 66 10-50
Web page:
More information through EDIRC

Related research

Keywords: Central and East European new EU member states; Southeast Europe; Balkans; former Soviet Union; China; Turkey; GDP; industry; productivity; labour market; foreign trade; exchange rates; inflation; fiscal deficits; EU integration;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:


No references listed on IDEAS
You can help add them by filling out this form.


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Peter Havlik & Wlodzimierz Kalicki & L. Randall Wray, 2008. "Monthly Report No. 5/2008," wiiw Monthly Reports 2008-05, The Vienna Institute for International Economic Studies, wiiw.
  2. Leon Podkaminer & Sandor Richter & Marton Szabó, 2008. "Monthly Report No. 7/2008," wiiw Monthly Reports 2008-07, The Vienna Institute for International Economic Studies, wiiw.
  3. Vladimir Gligorov & Anna Iara & Michael Landesmann & Robert Stehrer & Hermine Vidovic, 2008. "Western Balkan Countries: Adjustment Capacity to External Shocks, with a Focus on Labour Markets," wiiw Research Reports 352, The Vienna Institute for International Economic Studies, wiiw.
  4. C. Goodhart & D. Lee, 2013. "Adjustment Mechanisms in a Currency Area," Open Economies Review, Springer, vol. 24(4), pages 627-656, September.


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:wii:fpaper:fc:1. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Customer service).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.