CEE region: Not catching up on Western Europe
Economic balance, 20 years after Eastern Europe opened up
Twenty years after the East opened up, there is still an economic gulf between it and the West. Nor will this change in the next ten years, as Roland Berger Strategy Consultants' current study "Twenty years of the CEE economic region – Assumptions for sustainable development" shows. Erste Group and the IDM discussed these hypotheses on the region's economic future at the CE Business Club Wednesday evening, with over a hundred top Austrian managers present.
"Twenty years after the Iron Curtain came down, the financial gulf between Western and Eastern Europe is still as great as ever," says Vladimir Preveden, Managing Partner at Roland Berger's Zagreb office. Central and Eastern Europe may have been seen as a boom region since the year 2000; between 1989 and 1995; as they switched to the free market system, however, these economies shrank by 8% p.a. on average. By way of comparison, Austria grew at 2.4% p.a. over the same period. It was not until the mid-1990s that the CEE's economies settled down. The Polish economy was the first to get back to where it was in 1989, which it did in 1995, followed by Slovenia (1998) and Hungary (2000). Even today, Serbia and the Ukraine have only reached 70% of their GDP of 20 years ago.
It was from the dawn of the new millennium that the CEE region started succeeding. "In the last 10 years, it has been growing at an average of 5% p.a. – around twice as fast as Western Europe," says Ingrid Krenn-Ditz, head of Erste Group AG's EU Affairs department. The growth leaders were Russia (6.8% p.a.) and the Ukraine (6.2%), followed by Bulgaria (5.5%) and Romania (5.4%). "Though it was these countries that collapsed the worst before," Krenn-Ditz says. Apart from Poland, whose GDP is now 177% of what it was in 1989, none of these countries have closed the gap on Western Europe to any great extent. Austria's GDP is now 158% of what it was then, ahead of the rest of the CEE region.
The are various opinions on how this region's economies will develop. Roland Falb, Managing Partner of the Danube Region at Roland Berger, said during his welcome speech that "personally, I tend to view the situation more optimistically. Even if current structural weaknesses are compounding the crisis in CEE, we are still talking about huge catch-up demand, manufacturing cost advantages combined with rising productivity, a very high level of training among young workers and considerable entrepreneurship for driving growth in this region." Over the medium term, he expects Central and Eastern Europe to produce a slight knock-on effect for Austria's economy.
Twenty years after the East opened up, there is still an economic gulf between it and the West. Nor will this change in the next ten years, as Roland Berger Strategy Consultants' current study "Twenty years of the CEE economic region – Assumptions for sustainable development" shows. Erste Group and the IDM discussed these hypotheses on the region's economic future at the CE Business Club Wednesday evening, with over a hundred top Austrian managers present.
"Twenty years after the Iron Curtain came down, the financial gulf between Western and Eastern Europe is still as great as ever," says Vladimir Preveden, Managing Partner at Roland Berger's Zagreb office. Central and Eastern Europe may have been seen as a boom region since the year 2000; between 1989 and 1995; as they switched to the free market system, however, these economies shrank by 8% p.a. on average. By way of comparison, Austria grew at 2.4% p.a. over the same period. It was not until the mid-1990s that the CEE's economies settled down. The Polish economy was the first to get back to where it was in 1989, which it did in 1995, followed by Slovenia (1998) and Hungary (2000). Even today, Serbia and the Ukraine have only reached 70% of their GDP of 20 years ago.
It was from the dawn of the new millennium that the CEE region started succeeding. "In the last 10 years, it has been growing at an average of 5% p.a. – around twice as fast as Western Europe," says Ingrid Krenn-Ditz, head of Erste Group AG's EU Affairs department. The growth leaders were Russia (6.8% p.a.) and the Ukraine (6.2%), followed by Bulgaria (5.5%) and Romania (5.4%). "Though it was these countries that collapsed the worst before," Krenn-Ditz says. Apart from Poland, whose GDP is now 177% of what it was in 1989, none of these countries have closed the gap on Western Europe to any great extent. Austria's GDP is now 158% of what it was then, ahead of the rest of the CEE region.
The are various opinions on how this region's economies will develop. Roland Falb, Managing Partner of the Danube Region at Roland Berger, said during his welcome speech that "personally, I tend to view the situation more optimistically. Even if current structural weaknesses are compounding the crisis in CEE, we are still talking about huge catch-up demand, manufacturing cost advantages combined with rising productivity, a very high level of training among young workers and considerable entrepreneurship for driving growth in this region." Over the medium term, he expects Central and Eastern Europe to produce a slight knock-on effect for Austria's economy.
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