Rossia Economy

 

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what is eastern europe · ex-eastern european bloc ­ economic system · ethnic and cultural groupings eastern europe economy class 1 december 3 2009 6 7 eastern european bloc · formed after wwii soviet sphere of influence · communist governments similar political economic systems · warsaw pact 1955 as opposed to nato 1949 excl yugoslavia albania after 1968 g countries of the eastern europe · balkan states southeastern europe albania bulgaria eu bosnia and herzegovina exyugoslavia croatia ex-yugoslavia macedonia ex-yugoslavia montenegro ex-yugoslavia serbia ex-yugoslavia slovenia eu exyugoslavia romania eu r i · eastern central european states czech republic eu exczechoslovakia slovakia eu exczechoslovakia hungary eu poland eu · other eastern european states ex-ussr belarus ex-ussr ukraine ex-ussr moldova ex-ussr russia ex-ussr transcontinental 9 · comecon or cmea international g economic assistance organization of the communist states 8 · baltic states estonia eu ex-ussr latvia eu ex-ussr lithuania eu ex-ussr incl non-european countries economic development of the eastern bloc · · 1917 ­ communists gain power in russia 1922 ­ soviet union ussr is organized iron curtain separates europe after wwii european community vs comecon cmea 1949 ­ socialist international division of labour and intra-regional trade gdp levels of the eastern bloc in i 1990 i t international mln i c ti l l in comparison i 1950 total 29 western europe united states japan eastern europe albania bulgaria czechoslovakia hungary poland romania yugoslavia total 7 ee countries ussr 11 1960 1970 1980 1988 1989 1 396 078 2 250 534 3 590 925 4 849 192 5 763 153 5 960 855 1 455 916 2 046 727 3 081 900 4 230 558 5 512 845 5 703 521 160 966 1 229 11 971 43 368 23 158 60 742 19 279 25 277 185 023 510 243 375 090 1 013 602 1 568 457 2 107 060 2 208 858 2 355 22 908 69 749 36 431 95 121 33 931 44 190 304 685 4 321 40 523 92 592 51 974 144 018 57 779 74 489 465 695 6 270 53 449 121 763 67 549 204 213 91 517 131 058 675 819 7 713 56 903 135 308 73 421 219 217 93 020 141 983 727 564 7 917 55 883 136 418 71 776 215 815 90 051 140 179 718 039 · socialist economies develop in eastern europe nationalization introduction of planned command economy · first 5-year p y plans · production prices and wages are planned heavy industrialization and eventual over-industrialization collectivization of agriculture communist party dominates economic decisions · deviations from the soviet model after 1950ies yugoslavia hungary poland private farms and small business allowed state industrial enterprises can decide on production and investment some free trade allowed 843 434 1 351 818 1 709 174 2 007 280 2 037 253 source angus maddison 10

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gdp per capita levels of the eastern bloc in i 1990 mln i c l in comparison i 1950 total 29 western europe united states japan eastern europe albania bulgaria czechoslovakia hungary poland romania yugoslavia total 7 ee countries ussr 1 001 1 651 3 501 2 480 2 447 1 182 1 551 2 111 2 841 1 451 2 912 5 108 3 649 3 215 1 844 2 437 3 070 3 945 2 004 4 773 6 466 5 028 4 428 2 853 3 755 4 315 5 575 2 347 6 044 7 982 6 306 5 740 4 135 6 063 5 786 6 427 2 459 6 335 8 709 7 031 5 789 4 085 6 300 6 000 7 040 2 477 6 216 8 768 6 903 5 684 3 941 6 193 5 905 7 109 13 economic transition in ee · 1985-1991 political liberalization in ussr gorbachev eastern european countries left on their own comecon breakup in 1991 rapid reforms incl with the aim of eu entrance the fall of the berlin wall 9 november 1989 ­ october 1990 1960 6 896 11 328 3 986 1970 10 195 15 030 9 714 1980 13 197 18 577 13 428 1988 15 405 22 499 17 185 1989 15 855 23 059 17 943 4 578 9 561 1 921 source angus maddison source deutsche welle 12 burden of the previous system · production structure linked to the previous economic systems ussr c i t ussr comecon industrialization excess capacities and low productivity reforms set off · 1990ies ­ reforms in eastern europe quick poland baltic states russia or more gradual g hungary g y ex-yugoslavia price liberalization privatization cut of budget expenditures incl social incl welfare 15 · deficient structure of human capital and uncompetitive behavior p · almost no economic basis for the marketoriented reforms state ownership of most p economic subjects · governments incompetent in managing macroeconomic problems in market-oriented economy 14 inflation after transition 1991-1995 1991 albania belarus bulgaria hungary latvia lithuania macedonia moldova poland russia romania slovakia slovenia ukraine croatia czech rep estonia 104 93 339 32 262 345 115 151 60 144 223 58 247 161 249 52 304 1992 237 1558 79 22 958 1161 1935 2198 44 2318 199 9 93 2000 937 13 954 1993 31 1994 64 21 35 189 230 837 38 841 296 25 23 10155 1150 18 36 1994 16 1957 122 21 26 45 55 116 29 203 62 12 18 401 -3 10 42 1995 6 244 33 28 23 36 9 24 22 131 28 7 9 182 4 8 29 16 gdp growth after transition 1991-1995 1991 albania belarus bulgaria hungary latvia lithuania macedonia moldova poland russia romania slovakia slovenia ukraine croatia czech rep estonia -27,7 -1,2 -11,7 -11,9 -8,3 -13,4 -12,1 -17,5 -7 -13 -12,9 -14,6 -8,1 -9 -20 -14,2 -11 1992 -9,7 -9,6 -7,3 -3,1 -5 -37,7 -21,1 -29 2,6 -14,5 -8,8 -6,5 -5,4 -10 -10 -6,4 -14,2 1993 11 -10,6 -2,4 -0,6 -6 -24,2 -8,4 -1 3,8 -8,7 1,3 -4,1 1,3 -14 -3,7 -0,9 -8,5 1994 9,4 -12,2 1,8 2,9 0,6 1 -4 -31 5,2 -12,6 3,9 4,8 5,3 -23 0,8 2,6 -2,7 1995 8,6 -10,2 2,6 1,5 -1,6 3,1 -1,5 -3 7 -4 6,9 7,4 3,5 -11,8 2 4,8 3,2 17 source the institute for the economy in transition russia source the institute for the economy in transition russia

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real gdp in 2001 1989=100 140 120 100 80 60 40 20 0 ol do uk va ra bo in sn e ia sean rb i a d he rz r m us on si te a ne li gro th ua ni a la tv b u ia m lga ac r ia ed o ro n ia m an cr ia oa e s t ia to n b e ia cz la ru ec h s r sl ep ov a hu kia ng a al r y ba sl nia ov en p o ia la nd results of transition · eu accession for 10 countries · accelerated rates of economic growth growth driven by · domestic consumption fueled by cheap credit ce+see · e export prices r t i russia uk i i ukraine · discounted gas ukraine belarus moldova · overall growth in eu · fdi m 18 source ebrd 19 results of transition eu accession integration of 10 countries into eu · 1 may 2004 8 countries join eu czech republic slovakia estonia latvia lithuania hungary hungary poland slovenia eu-15 on enlargement 2004 · 1 january 2007 ­ 2 countries join eu bulgaria romania · croatia and macedonia are official candidates 20 21 results of transition gdp growth rates of prev year 2001 albania belarus bosnia and herz bulgaria croatia czech republic estonia hungary latvia lithuania moldova montenegro poland romania russia serbia slovakia slovenia macedonia ukraine 22 source eurobarometer 61 spring 2004 source unece 2002 7,9 4,7 4,3 4,1 41 4,4 2,5 7,7 4,1 8 6,7 6,1 1,1 1,2 5,8 5,1 5,4 3,4 2,8 4,2 5 5,3 4,5 45 5,6 1,9 7,8 4,1 6,5 6,9 7,8 1,9 1,4 5,2 4,7 3,6 4,8 4 0,9 5,2 2003 5,8 7 4,4 5 5,3 3,6 7,1 4,2 7,2 10,2 6,6 2,5 3,9 5,3 7,3 2,8 4,7 2,8 2,8 9,6 2004 5,7 11,4 6,3 6,6 66 4,3 4,5 7,5 4,8 8,7 7,4 7,4 4,4 5,3 8,5 7,2 8,2 5,2 4,3 4,1 12,1 2005 5,8 9,4 3,9 6,2 62 4,3 6,3 9,2 4 10,6 7,8 7,5 4,2 3,6 4,2 6,4 6 6,5 4,3 4,1 2,7 2006 5,5 10 6,9 6,3 63 4,8 6,8 10,4 4,1 11,9 7,8 4,8 8,6 6,2 8,2 7,4 5,6 8,5 5,9 4 7,3 2007 6,2 8,6 6,6 6,2 62 5,5 6 6,3 1,2 10 8,9 3 10,7 6,6 6,2 8,1 6,9 10,4 6,8 5,9 8,9 2008 8 10 5,4 6 2,5 3,2 -3,6 0,6 -4,6 3 7,2 5 7,1 5,6 6,1 6,4 3,5 4,9 3,2 23 -4,5 9,2

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major challenge business climate barriers to investment in eastern europe p excl cis 2009 of respondents 60 50 40 30 20 10 polit tical instab bility very important y p important 0 econo omic instab bility corrup ption 24 bureaucracy source vienna institute for international economic studies source economist intelligence unit cee investor survey 2009 2010 2009 22 28 29 71 36 45 41 54 47 85 90 76 75 86 94 103 106 119 120 145 2008 18 28 26 79 37 44 50 64 47 115 84 72 65 135 91 92 107 117 112 144 business climate world bank w ld b k ease of doing g business ranking 183 countries top ranks singapore singapore new zealand hong kong zealand www.doingbusiness.org estonia lithuania latvia macedonia slovakia bulgaria hungary slovenia romania belarus montenegro poland czech rep albania serbia moldova croatia bosnia and herz russia ukraine 24 26 27 32 42 44 47 53 55 58 71 72 74 82 88 94 103 116 120 142 business climate transparency international i t ti l corruption perception i d p ti index 180 countries scores s 10 ­ no corruption 1 ­ highly corrupt top ranks new zealand denmark zealand denmark singapore www.transparency.org tax rules r 2009 rank estonia slovenia hungary poland czech republic lithuania latvia slovakia croatia montenegro bulgaria macedonia romania serbia moldova albania bosnia and herz belarus russia ukraine 27 27 46 49 52 52 56 56 66 69 71 71 71 83 89 95 99 139 146 146 poor ipr r court systems 2008 rank 26 27 45 47 52 52 58 58 62 70 72 72 85 85 85 92 109 134 147 151 2009 score 6,6 6,6 5,1 5 4,9 4,9 4,5 4,5 4,1 3,9 3,8 3,8 3,8 3,5 3,3 3,2 3 2,4 2,2 2,2 27 per p capita it gdp of eu-15 average gdp at prices and ppps of 2005 albania belarus bosnia and herz bulgaria croatia czech rep estonia hungary latvia lithuania moldova montenegro m t poland romania russia serbia slovakia slovenia macedonia ukraine 2004 2005 2006 2007 2008 17 18 18 19 21 24 26 28 29 32 16 16 17 18 n/a 27 28 29 30 32 45 46 47 49 50 59 61 63 65 67 46 49 53 55 53 50 51 52 51 52 36 39 43 46 45 40 43 45 48 50 7 7 7 7 8 24 25 26 28 n/a 41 41 43 44 47 28 28 30 31 33 34 36 37 40 42 25 26 26 28 n/a 56 58 61 66 70 69 71 72 75 77 23 23 23 24 25 17 17 18 19 20 source unece source pew research center

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20 years after transition views on changes in household wealth since 1989 i 20 years after transition source life in transition ebrd 2006 source pew research center sources of vulnerability · growth driven by domestic consumption fueled by cheap consumer credit · large current account deficits ­ over 5 of g gdp ­ and large external debts ­ over 30 gdp · integration into european economy euro area economy is slowing down ­ intra-regional trade and fdi declining eastern europe p and the current crisis 32 33 fdi the case of the banking sector consumer credit nominated in non-local currency and p id dbfibkcd provided by foreign banks 34 source economist 35

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2006 2007 -9,1 -6,8 -12,7 -25,1 -7,6 -3,2 -18,1 -6,4 -22,6 -14,6 -7,2 -17,0 -29,3 -4,7 -13,9 5,9 -15,3 -5,4 -4,2 -3,7 2008 -14,1 -8,4 -14,7 -25,5 -9,4 -3,1 -9,3 -8,4 -12,6 -11,6 -13,1 -17,7 -29,6 -5,5 -12,4 6,1 -17,3 -6,5 -5,5 -7,2 2009f -11,5 -9,6 -8,8 -11,4 -6,1 -2,1 1,9 -3,0 4,5 1,0 -10,6 -11,8 -16,0 -2,2 -5,5 3,6 -9,1 -8,0 -3,0 0,4 2010f -8,0 -7,1 -9,1 -8,3 -5,4 -2,2 2,0 -3,3 6,4 0,5 -9,7 -11,9 -11,0 -3,1 -5,6 4,5 -10,6 -7,8 -4,7 0,2 37 source ft quoting capital economics balance of current account account of gdp imf source imf world economic o tl k e i outlook database october 2009 albania belarus bosnia and herz bulgaria croatia czech rep estonia hungary latvia lithuania macedonia moldova montenegro poland romania russia serbia slovakia slovenia ukraine -5,6 -3,9 -8,4 -18,4 -6,7 -2,6 -16,7 -7,5 -22,5 -10,7 -0,9 -11,8 -24,1 -2,7 -10,4 9,5 -10,1 -7,1 -2,5 -1,5 external debt 2008 fdi slows down fdi inflows into eastern europe us mln 160000 140000 120000 100000 80000 60000 40000 20000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 currency devaluation currency depreciation local currency us july 2008 to october 2008 0 bulgaria a poland d czech r r hungary y ukraine e romania a -5 -10 -15 -20 -25 -30 -35 -40 source economist intelligence unit slovakia a russia a serbia a source world bank imf s helping hand imf s helping hand · · · · · · · · · · hungary $15.7 bn november 2008 g y ukraine $16.4 bn november 2008 latvia $2.35 bn december 2008 belarus $2 46 b j b l $2.46 bn january 2009 serbia $4 bn may 2009 romania $17 1 bn may 2009 $17.1 poland $20.58 bn may 2009 bosnia a d herzegovina $1.57 b ju y 2009 os a and e ego a 5 bn july 009 moldova $590 mln october 2009 bulgaria croatia macedonia ­ may be forced to seek imf help ltkhl later future challenges debt and reserves in 2009 us bn country external vulnerability in 2009 official gross international reserves st external d bt t l debt greenspan-guidotti ratio source dresdner kleinwort

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2009 albania 0,7 -1,2 -3,0 -6,5 -5,2 -4,3 -14,0 -6,7 -18,0 -18,5 -2,5 -9,0 -4,0 1,0 -8,5 -7,5 -4,0 -4,7 -4,7 -14,0 2010 2,2 1,8 0,5 -2,5 0,4 1,3 -2,6 -0,9 -4,0 -4,0 2,0 0,0 -2,0 2,2 0,5 1,5 1,5 3,7 0,6 2,7 2011 6,3 5,2 4,0 2,0 2,5 2,5 1,4 3,2 1,5 3,0 5,0 3,0 3,7 4,0 4,6 3,0 3,0 5,2 3,8 4,0 prospects for 2009 and beyond imf gdp growth forecast october 2009 belarus bosnia and herz bulgaria croatia czech rep estonia hungary latvia lithuania macedonia moldova montenegro poland romania russia serbia slovak rep slovenia ukraine country briefs c t bi f source imf world economic outlook database october 2009 balkan states the balkan states · · · · · · · · · 44 the balkan states albania bosnia and hbid herzegovina i croatia macedonia montenegro serbia slovenia eu bulgaria eu romania eu 45 albania · albania economy · · ne of the poorest countries in europe gdp per capita 2008 6 859 current int bn imf 21 of eu-15 average population below poverty line 12.4 wb 2008 unemployment 30 unofficial cia 2007 drug t ffi ki d trafficking corruption organized crime trafficking in persons ti idit ffi ki i economy sustained largely by remittances from albanians based in other countries mainly italy and greece sectors of economy agriculture wheat corn potatoes vegetables meat 21 of gdp 60 of employment industry 21 gdp services ­ 58 gdp · big potential for tourism adriatic coast gdp gdp growth rate 2008 8 unece 2009 forecast imf 0.7 gdp ppp 2008 21.8 current int bn imf gray economy 50 of official gdp g y y crisis issues small agrarian economy is relatively unaffected by global crisis however remittances have decreased by 16 in 2008 investments in infrastructure stopped anti-crisis measures attempts to cut public spending to fight the growing budget deficit avoid currency depreciation source for gdp composition cia data for 2007 official name the republic of albania population 3 2 mln 2007 3.2 area 28 748 sq km capital tirana 367 000 major language albanian major religions muslim 70 orthodox 70 20 catholic 10 · monetary unit code 1 lek all 100 qindars · · · · · · · · · internet domain .al · int dialling code +355 46 47

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ex-yugoslavia ex-yugoslav republics · b bosnia and h i d herzegovina i · croatia · macedonia · montenegro · serbia · slovenia balkan states which never were a part of yugoslavia · albania romania bulgaria 48 bosnia and herzegovina official name bosnia and herzegovina population 3,6 4 mln est area 51 129 sq k a 51,129 km capital sarajevo 579 000 major languages bosnian croatian serbian bosnian croatian major religions muslim 44 bosniaks orthodox 32 serbs catholic 17 croats · monetary unit code 1 marka bam 100 pfenniga kuna in croat regions dinar in serbian regions · · · · · · · internet domain .ba · int dialling code +387 49 bosnia and herzegovina economy · · · · · industrialized by yugoslavia 60 of yugoslav military industry rich in resources bauxite iron ore coal etc attractive for foreign investors esp in metallurgy sector economy and infrastructure almost destroyed by war corruption high unemployment rate 40 and ethnic tensions are main issues sectors of economy industry 20 gdp steel other metals etc services 60 gdp tourism ­ potential growth sector skiing and summer resorts agriculture 10 gdp gdp growth uneven fbh doing better than rs international financial assistance accounts for 20 of gdp growth gdp growth rate 2008 5,4 unece 2009 forecast imf -3 gdp ppp 2008 30.4 current int bn imf gray economy 50 of official gdp gdp per capita 2008 7 610 current int bn imf 22 of eu-15 average crisis issues imf loan 1,57 bn granted in july 2009 to stabilize the budget imf requires sharp cuts in social welfare programs and governmental salaries which can hardly be done decreasing wages avg wage $500 and remittances prospective increase in social tensions and worsening criminal and political situation 50 source for gdp composition cia data for 2007 croatia · · · · · · · official name republic of croatia population 4 5 mln j l 2008 est p l ti 4,5 l july t area 56 594 sq km capital zagreb c it l z b approx 1 mln l major language croatian major li i m j religion r roman c th li 88 catholic monetary unit code 1 kuna hrk 100 lipa · · · internet domain .hr · int dialling code +385 int 51 croatia economy · · · second-most prosperous of yugoslav republics after slovenia economy affected by war 1992-1995 revival since 1990ies gdp growth rate 3-6 since 2000 gdp growth rate 2008 2.5 unece 2009 forecast imf -5.2 gdp ppp 2008 82.3 current int bn imf gdp per capita 2008 18 545 current int bn imf 50 of eu-15 average sectors of economy services 60 gdp incl tourism extensive adriatic coast national parks parks historic cities over 10 mln tourists per year creating 20 of gdp year industry 30 of gdp shipbuilding chemical industry food processing agriculture 7 of gdp crisis issues anti-crisis measures corporate tax vat increase to raise revenues cutting expenditures incl agriculture subsidies external debt grows in 2009 debt service 21 of gdp may seek imf grows loan source for gdp composition cia data for 2007 macedonia · official name republic of macedonia the former yugoslav republic of macedonia · population 2 mln un 2007 · area 25 713 sq km · capital skopje 447 000 · major languages macedonian albanian both official · religions orthodox 65 muslim 33 · monetary unit code 1 denar mkd 100 deni · · · internet domain .mk · int dialling code +389 52 53

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macedonia economy · · · very poor agrarian economy before 1945 industrialized by yugoslavia but still the least developed republic sustained by transfer payments from the central budget 2000 2006 2000-2006 ­ slowest growing economy in the balkans however gdp growth accelerated after 2003 4 in 2004-2006 5 in 2007 gdp growth rate 2008 4.9 unece 2009 forecast imf -2.5 gdp ppp 2008 18.8 current int bn imf gray economy 20 of official gdp p p imf 25 of eu-15 average g gdp per capita 2008 9 157 current int bn montenegro · · · · · official name republic of montenegro population 598 000 un 2007 area 13 812 sq km capital podgorica 152 000 major languages montenegrin official ­ dialect of serbian serbian 64 orthodox 74 muslim 18 · · main problems unemployment 35 and poverty 30 below poverty line sectors of economy services 60 gdp trade transport trade · tourism ­ high potential but underdeveloped · religions · monetary unit code euro eur industry 30 gdp iron and steel processing automotive components textiles chemicals agriculture 10 gdp wines tobacco · crisis issues export sectors metallurgy textile badly hit banking sector not heavily affected due to its underdevelopment decrease in remittances 2007 ­ remittances covered 90 of trade deficit 2008 ­ 50 fdi almost stopped anti-crisis measures aimed to stimulate economy tax relieves subsidies capital investments 54 · internet domain .me .cg.yu · int dialling code +382 source for gdp composition cia data for 2007 55 montenegro economy · stable economic development since independence growth was driven by fdi 618 mln in 2006 $876 mln in 2007 unctad gdp growth rate 2008 8 unece 2009 forecast imf -4 gdp ppp 2008 6.9 current int bn imf gdp per capita 2008 11 092 current int bn imf 32 of eu-15 average serbia · official name republic of serbia · population 9.9 mln un 2007 incl kosovo 2 mln un 99 incl mln est · area 88 361 sq km · c it lbld 1 6 mln capital belgrade 1.6 l · major language serbian · religions orthodox 85 catholic 6 muslim 3 · monetary unit code 1 dinar rsd 100 paras · sectors of economy · industry 30 gdp ­ esp metallurgy aluminum ­ 15-20 gdp · resources bauxite iron services 70 gdp incl tourism adriatic coast mountain skiing historic cities ­ 7 growth in 2007 13 growth in 2008 est stimulates construction · · key problems business climate and corruption crisis issues small economy without a developed banking system ­ not heavily affected by crisis main anti-crisis measures ­ stimulating purchase of houses by non-residents conducts informal negotiations with imf · internet domain .rs .yu y · int dialling code +381 56 source for gdp composition expert estimates exact data n/a 57 industry and infrastructure damaged by air strikes economic sanctions stable growth since 2001 almost no profound reforms gdp growth rate 5.3 2001-2006 7.5 2007 gdp growth rate 2008 6.1 unece 2009 forecast imf -4 gdp ppp 2008 79 6 current int bn imf 79.6 int gdp per capita 2008 10 792 current int bn imf 31 of eu-15 average · sectors of economy industry 25 gdp incl metallurgy steel buses trucks agricultural machinery electrical communications and transportation equipment paper and pulp services 65 gdp agriculture 10 gdp · crisis issues banking system dominated by foreign banks massive bank deposits withdrawal ­ lack of liquidity and rising cost of credit imf loan 4.3 bn granted in may to stabilize fx reserves and restore confidence in the banking system anti-crisis measures cutting expenditures jobs and salaries in the public administration tax raise fuel excise luxury tax mobile phone tax further tax hikes may become necessary imf recommends vat increase stimulating measures infrastructure building consumer credits growing unemployment 18 in 2007-2008 20 in 2009 and political instability slogan of the day nothing succeeds in serbia so the crisis will also fail 58 · · serbia economy slovenia · · · · · · · official name republic of slovenia population 2 mln un 2007 p l ti l area 20 273 sq km capital ljubljana 256 000 c it l lj blj major language slovene religion r r li i roman c th li 58 catholic monetary unit code euro eur · internet domain .si · int dialling code +386 int 59 source for gdp composition cia data for 2007

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slovenia economy · · the most prosperous of yugoslav republics 20-30 of gdp with the most liberal economy and highest standard of living industry and infrastructure preserved as didn t suffer from war stable growth since 1990ies gdp growth rate 5 2004-2006 6.8 2007 gdp growth rate 2008 3.5 unece 2009 forecast imf -4.7 gdp ppp 2008 59.3 current int bn imf gdp per capita 2008 29 472 current int bn imf 77 of eu 15 average int imf eu-15 highest among cee countries export-oriented economy bulgaria · · · · · · · official name republic of bulgaria population 7 6 mln july 2008 est 7.6 est area 111 000 sq km capital sofia p 1.2 mln major language bulgarian major religions orthodox 83 muslim 12 monetary unit code lev bgn 100 stotinki · sectors of economy industry 34 gdp electric appliances pharmaceuticals furniture automobile assembly and automobile parts metallurgy steel and steel products aluminum services 64 gdp incl tourism adriatric coast the alps 2 mln tourists year agriculture 2 gdp · crisis issues the only balkan economy in euro zone ­ not exposed to currency problems smallest current account deficit in the balkans hit by declining exports but relatively well-off follows anti-crisis stimulating policy state aid and guarantees · internet domain .bg bg · int dialling code +359 · year of eu entry 2007 y 61 60 source for gdp composition cia data for 2007 bulgaria economy · · one of the poorest eu members together with romania gdp per capita 12 341 current int bn imf 32 of eu-15 average gdp growth rate 2008 6 unece 2009 forecast imf -6.5 g gdp ppp 2008 93 6 current int bn 008 93.6 cu ettb imf sectors of economy industry 32 gdp food processing beverages and tobacco machinery and equipment base metals oil processing energy production large coal deposits nuclear power services 62 gdp incl tourism 5 mln tourists in 2007 black sea coast mountain skiing cultural tourism agriculture 6 gdp fertile soils provide good basis for agriculture famous for its revolutionary tax policy since end of 2007 corporate profit tax and income tax 10 lowest in the eu crisis issues adopts ad t social-oriented stimulating anti-crisis policies ilitd ti l ti ti i i li i so far ­ maintaining currency peg undermining competitiveness and depleting fx reserves y $26.2 bn of debt coming due in 2009 equal to 64 of gdp fx g q heavily indebted reserves not sufficient ­ imf help might be needed source for gdp composition cia data for 2007 romania · · · · · · · official name republic of romania population 21 4 mln un 2007 p l ti 21.4 l area 238 391 sq km capital bucharest 1 9 mln c it lbht 1.9 l major language romanian religions orthodox r li i o th d 90 monetary unit code 1 leu ron 100 bani · · · internet domain .ro · int dialling code +40 int 63 62 romania economy · · one of the poorest eu members together with b lgaria ith bulgaria gdp per capita 2008 12 580 current int bn imf 33 of eu-15 average gdp growth rate 2008 7.1 unece 2009 forecast imf -8.5 gdp ppp 2008 270 3 current int bn imf 270.3 int sectors of economy industry 36 gdp automobile assembly renault ford daewoo clothing and footwear extractive industries timber marble oil ­ but oil reserves are declining oil refining services 56 gdp promoting tourism is a major task black sea coast skiing in carpathians historic cities ­ currently 6 mln tourists year agriculture 8 gdp ­ once a bread basket of europe food tobacco and bread basket food beverages are main products crisis issues historically ­ high budget deficits financed by short-term debt similar to hungary capital outflow ­ currency devaluation imf loan 28.8 bn granted in march to stabilize fx reserves stopped in november however devaluation of currency helped food and beverage industries exports are rising anti-crisis policies budget expenditure cuts and tax increase incl turnover tax ­ highly disputable source for gdp composition cia data for 2007 central eastern europe · · · · · czech republic slovakia hungary poland 64 65

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czech republic · · · · · · · · · · 66 · · official name czech republic population 10.2 million un 2007 p area 79 000 sq km capital prague 1.2 mln major language cmjl czech h major religion roman catholic 27 unaffiliated 60 monetary unit code 1 koruna czk 100 haler internet domain .cz i t td i int dialling code +420 year of eu entry 2004 since the end of xix cent one of the most industrialized states in the world before crisis a stably growing economy gdp growth rate over 6 2005-2007 wb czech republic economy gdp growth rate 2008 3.2 unece 2009 forecast imf -4.3 gdp ppp 2008 262.2 current int bn imf gdp per capita 25 359 current int bn imf 67 of eu-15 average · sectors of economy economy industry 39 gdp machinery cars trams and trains power generation equipment jets etc chemical and pharmaceutical industry wood-processing metallurgy weapons traditional industries glass beer services 59 gdp esp tourism and recreation agriculture 2 gdp · crisis issues along with poland one of the strongest economies in cee hit mainly by export slowdown mostly automobiles 20 of industrial output exports 75 of gdp p adopts stimulating anti-crisis measures corporate tax reduction vat for cars reduction tax administration although growing budget deficit is a worry allows currency to gradually devalue source for gdp composition cia data for 2007 67 slovakia · · · · · official name republic of slovakia population 5 4 mln un 2007 5.4 area 49 033 sq km capital bratislava 425 000 major language slovak 85 official hungarian 11 · religions roman catholic 70 protestant 11 · monetar unit code monetary nit code euro eur · · slovakia economy industrialized during czechoslovak period very rapid growth before crisis gdp growth rate 8.5 2006 10.4 2007 growth fuelled by fdi manufacturing sector y g gdp growth rate 2008 6.4 unece 2009 forecast imf -4.5 gdp ppp 2008 119.3 current int bn imf gdp per capita 22 040 current int bn imf 70 of eu-15 average second to slovenia · sectors of economy industry 34 gdp automobile vw peugeot-citroen kia electronic goods sony whirlpool samsung chemical production metallurgy steel y p g p gy services 64 gdp incl tourism agriculture 2 gdp · crisis issues no currency risks due to euro adoption in 2009 but cannot devalue similarly to czech rep highly dependent on automobile production 25 of industrial output and export 85 of gdp badly hit by export slowdown anti-crisis policy aimed at p p y preserving employment g p y scrapping bonus introduced for old car owners to stimulate domestic sales · internet domain .sk · int dialling code +421 68 69 source for gdp composition cia data for 2007 hungary official name republic of hungary population 9.9 mln july 2008 est area 93 030 sq km capital budapest 1.7 mln major language hungarian magyar religions roman catholic 52 calvinist 16 unaffiliated 15 · monetary unit code forint huf hungary economy · · industrialized since 1950ies sectors of economy industry 32 gdp automobile chemical and pharmaceutical p y p production food processing meat products metallurgy aluminum steel services 66 gdp incl tourism agriculture 2 gdp · · · · · · · economic growth slow 4 4 in 2000 2006 rapid decline since 2007 1 1 in 4.4 2000-2006 1.1 2007 after tax reforms in 2006 gdp growth rate 2008 0.6 unece 2009 forecast imf -6.7 gdp ppp 2008 196.1 current int bn imf gdp per capita 19 500 current int bn imf 52 of eu-15 average · crisis issues the first ee country affected by crisis big t bi external d bt and persistent bdtd fi it ­ very vulnerable t external shocks l debt ditt budget deficit l bl to tlhk capital outflow rapid currency depreciation and banking problems in autumn 2008 the first cee country to apply to imf for help 25.1 bn loan approved in october 2008 qgpy imf requires cutting social expenditures vat raised to 25 in july 2009 slogan of the day under communism we had a big government debt but we lived well under capitalism we have a big government debt but we don t live well · i t internet domain .hu td i h · int dialling code +36 70 71 source for gdp composition cia data for 2007

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poland · poland economy stable st bl economic growth b f i th before crisis 4 6 1996 2007 i i 4.6 1996-2007 gdp growth rate 2008 5 unece 2009 forecast imf -1 gdp ppp 2008 666 current int bn imf gdp per capita 2008 17 482 current i t b imf 47 of eu 15 it 2008 t int bn imf f eu-15 average · · · · · · · official name republic of poland population 38 1 mln un 2007 p l ti 38.1 l area 312 685 sq km capital warsaw 2 2 mln c it l w 2.2 l major language polish religions roman c th li 90 r li i r catholic monetary unit code 1 zloty pln 100 groszy · sectors of economy industry 32 gdp automobile assembly shipbuilding chemical assembly shipbuilding production fertilizers plastics rubber etc mining coal ­ the main source of energy food processing services 64 gdp agriculture 4 gdp · crisis issues big self-sufficient economy with a substantial domestic market exports g y p 40 of gdp not heavily hit by crisis devaluation made local producers more competitive income tax reduced pledge to enter euro zone by 2012 reassures the investors gdp growth rates positive and accelerating q1 ­ 0.8 y/y q2 ­ 1.1 y/y · internet domain .pl · int dialling code +48 int 72 73 source for gdp composition cia data for 2007 the baltic states · lithuania · latvia · estonia · ex-soviet republics · now in the eu baltic states 74 75 economy general overview · · industrialized during soviet period baltic tigers ­ rapid economic growth in 2000-2007 gdp growth quarterly y/y growth quarterly 2001 2002 2003 2004 2005 2006 estonia latvia lithuania · · · 2007 6,3 10,2 8,9 7,7 8 6,7 7,8 6,5 7,1 7,2 7,5 9,2 10,4 11,9 7,8 8,7 10,6 7,4 7,8 6,9 10,2 growth driven by internal consumption financed by credits from the g foreign-owned banks property price bubbles internal demand met by import ­ import growth ­ current account deficit and large external debts currencies pegged to euro source eurostat national statistics agencies 76

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latvia · · · · · · official name republic of latvia population 2 2 mln july 2008 est 2.2 est area 64 589 sq km capital riga 733 000 major language latvian religions lutheran 20 orthodox 20 15 · monetary unit code 1 lat lvl 100 santims internet domain .lv · · in 2000 ­ 2007 one of the fastest growing economies in europe growth driven by services latvia economy the steepest decline of gdp among cee countries expected in 2009 gdp growth rate 2008 -4.6 unece 2009 forecast imf -18 gdp ppp 2008 38.8 current int b imf 2008 38 8 t i t bn gdp per capita 2008 17 071 current int bn imf 45 of eu-15 average · sectors of economy services 75 gdp incl transport transit through sea ports and construction industry 22 gdp machinery declining wood processing pharmaceutical production agriculture 3 gdp · · decline in industrial sector lack of supportive policies crisis issues imf loan granted in december 2008 2.35 bn imf demands · expenditure cuts pension cuts stopping infrastructure projects agricultural subsidies cuts · revenue increase tax hikes property tax ­ banned by parliament in september vat 18%21 current 23 expected weighing heavily on local producers current 23 · economic measures unpopular political situation unstable which jeopardizes further external help maintaining currency peg unlikely although imf advocates it wage and price decrease current inflation -1 1 prospects unclear domestic demand deteriorated exports uncompetitive and almost nonexistent unemployment very high ­ 16.7 q2 2009 eu average ­ 9,1 · int dialling code +371 78 79 source for gdp composition cia data for 2007 lithuania · · · · · · · official name republic of lithuania population 3 6 mln j l 2008 est p l ti 3.6 l july t area 65,300 sq km capital vilnus 549 000 c it l vil major language lithuanian religion r r li i roman c th li 79 catholic monetary unit code 1 litas ltl 100 centas lithuania economy · hi t i ll ­ an agrarian economy i t historically i intensive industrialization disitiidti li ti during soviet period deep integration into soviet economy · gdp growth heavily affected by crisis gdp growth rate 2008 3 unece 2009 forecast imf -18 unece 18 gdp ppp 2008 63.6 current int bn imf gdp per capita 2008 18 946 current int bn imf 50 of eu-15 average · sectors of economy industry 33 gdp machinery electric equipment electric motors chemical production fertilizers oil processing construction materials cement food processing dairy and meat products textiles services 62 gdp agriculture 5 gdp milk and meat cattle · crisis issues anti-crisis measures ­ tax increases profit tax ­ 15 20 vat ­ 18 21 social i i l insurance t public spending cuts tax bli di t pensions and other payments ­ i d th t population protests as in latvia refuses to apply for imf loan similarly to latvia currency peg undermines competitiveness inflation in october -0,2 unemployment 13,6 81 source for gdp composition cia data for 2007 · internet domain .lt · int dialling code +370 int 80 estonia official name republic of estonia p population 1.3 mln un 2007 area 45 227 sq km p 430 000 capital tallinn major language estonian g 14 orthodox religions lutheran 13 unaffiliated 34 · monetary unit code 1 kroon eek 100 sents estonia economy · · agrarian economy before soviet period sectors of economy industry 28.5 gdp timber paper and furniture production food processing meat and dairy products machinery ltil equipment energy production t dd i d t hi electrical i t d ti based on oil shale services 68.5 gdp incl transport sea ports ­ freight and passenger shipping agriculture g 3 gdp meat and milk cattle as in other baltic states growth heavily affected by crisis gdp growth rate 2008 -3.6 unece 2009 forecast imf -14 gdp ppp 2008 27.2 current int bn imf gdp per capita 2008 20 259 current int bn imf 53 of eu 15 average it 2008 titb imf f eu-15 crisis issues very small economy almost completely dominated by scandinavian companies and banks anti-crisis measure ­ cutting budget expenditures state administration sale of state property maintains budget deficit at 3 gdp with a view of euro adoption in 2011 unemployment 13 5 q2 13,5 inflation 0 q2 future prospects completely depend on scandinavia source for gdp composition cia data for 2007 · · · · · · · · · internet domain .ee · int dialling code +372 82 83

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eastern europe · moldova · ukraine · belarus · · · · · · · moldova official name republic of moldova population 3 8 mln un 2007 p l ti 3.8 l area 33 800 sq km capital chisinau 662 000 c it l chi i major language moldovan romanian religions orthodox r li i o th d 98 monetary unit code 1 leu mdl 100 bani · ex-soviet republics · now in the cis · internet domain .md · int dialling code +373 int 84 85 moldova economy · poorest country in europe gdp per capita 2008 3 174 current int bn imf 8 of eu-15 average population below poverty line 25.8 2007 stat.mold gdp growth rate 2008 7.2 unece 2009 forecast imf -9 gdp ppp 2008 10.7 current int bn imf worker remittances account for 40 gdp wb estimates belarus · · · · · official name republic of belarus population 9 7 mln un 2007 9.7 un capital minsk 1.7mln area 207 595 sq km major languages russian belarusian both official · lack of natural resources mostly agrarian economy except transnistria ­ a self-proclaimed self proclaimed independent republic agriculture 19 gdp 40 of employment cia 2008 est main products ­ wine sugar tobacco vegetables · problems poverty especially in rural areas labor migration over 25 of labor force employed abroad wb lack of infrastructure roads most i d t is m t industry i concentrated itttd in transnistria i ti · major religion orthodox 80 · monetary unit code 1 belarusian ruble byb/byr 100 kopeks · crisis issues poor agrarian economy affected by crisis through drop in agricultural production also affected by draught and decline in remittances y g · transnistria affected by export contraction ­ tied to russian economy · internet domain .by · i t di lli code +375 int dialling d 375 87 imf loan granted in october 2009 590 mln 86 belarus economy · · historically one of the most prosperous soviet republics sectors of economy manufacturing 41 gdp machinery and equipment machine tools tractors dump trucks textile metal processing mining potash salt · economy based on large-scale industrial enterprises ukraine · · · · · official name ukraine population 47.2 mln un 2007 area 603 700 sq km capital kyiv kiev 2.6 mln major language ukranian 67 ­ official russian 25 · religion orthodox 95 roman catholic 3 95 · monetary unit code 1 hryvnia y uah 100 kopeks p agriculture 9 gdp services 50 gdp · · avg growth rate 7.6 in 2000-2006 belstat go growth d e by discounted gas p ces 008 ­ 67 of avg p ce for driven d scou ed prices 2008 6 o a g price o europe 2009 ­ 80 2010 ­ 90 gdp growth rate 2008 10 belstat 2009 forecast imf -1.2 gdp ppp 2008 118.9 current int bn imf gdp per capita 2008 12 291 current int bn imf 32 of eu-15 average eu 15 · economic policy ­ market socialism price and currency exchange rate controls almost all businesses are state-owned although privatization is planned foreign investment very low protective social policy low poverty very low unemployment 1 wb ­ big budget expenditures · crisis issues closed centralized state-owned economy not heavily affected by external shocks except decline in demand in the russian market imf loan granted in january 2009 2.46 bn ­ cutting social expenditures and subsidies privatization 88 source for gdp composition cia data for 2007 · internet domain .ua · int dialling code +380 89

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ukraine economy · initiall agrarian econom ind striali ed d ring so iet period initially economy industrialized during soviet · average real gdp growth rate 2000-2007 7.4 ukrstat gdp growth driven by discounted gas prices to a big extent 175.5 thou.m3 vs 340 in europe 2008 ­ and transportation tariffs gdp growth rate 2008 3.2 unece 2009 forecast imf -14 gdp ppp 2008 336.9 current int bn imf gdp per capita 2008 7 347 current int bn imf 20 of eu-15 average ukraine and russia gas t g transportation issues t ti i · sectors of economy y manufacturing 32.6 gdp cia 2007 est metallurgy based on domestic resources iron ore manganese aluminum bauxite esp steel production mining coal iron ore chemical production mineral fertilizers food processing machinery metallurgical equipment diesel engines tractors trucks agricultural machinery buses cars · production is energy-inefficient agriculture 9.2 gdp cia 2007 est wheat rye corn sugar beets sunflowers services 58.2 gdp cia 2007 est · crisis issues no consistent economic policy due to political unrest most heavily hit by drop in export demand esp steel currency depreciation by 60 in 2008 uah inflation ­ 22 3 in 2008 22.3 gdp contraction 20 q1 2009 imf loan granted in november 2008 16.4 bn will increase debt burden imf payments 90 stopped in november after minimum wage increase source for gdp composition cia data for 2007 91 source bbc

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