|
|
The enduring effects of the global financial crisis – including rising unemployment rates and decreasing exports – are continuing to impact countries around Europe, including the countries comprising the European Union 11 (EU11) – Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovenia, and the Slovak Republic. In 2012, this group of countries experienced economic growth of just 0.8 per cent – a four-fold decline from the previous year. Flagging domestic demand, negative employment growth, and declining intra-EU regional trade in the first half of 2013 are now pointing to an identical forecast of 0.8 per cent economic growth in the region for 2013. While growth is expected to eventually pick up in 2014, the labour markets in these countries are likely to only recover in the medium term.
Despite the slow recovery of economic activity, EU11 countries nonetheless remained attractive for foreign investors amid stable economic policies, calm financial markets and ample global liquidity. With labour productivity continuing to outpace growth in labour costs, the region strengthened its competitiveness. The flow of Foreign Direct Investment (FDI) also remained stable.
One positive economic trend that has gained momentum over the last year is an ongoing diversification of markets for exports coming from the EU11. While more traditional trade with European Union neighbours like Germany, Greece and Austria remain important, exports to a number of countries outside the EU market have now gained prominence – in particular, exports to the United States, Ukraine and Russia.
With only limited growth expected for the EU11 region in 2013, these economic gains are taking on increased importance. By building on positive trends such as market diversification and stable levels of FDI, countries in the EU11 are positioning themselves to exploit economic opportunities better in an environment of limited global growth. By laying these types of foundations during times of relatively low growth, countries in the EU11 can thereby pave a way toward a strong economic recovery that may just come sooner rather than later.