Catching-up Strategies in CESEE Economies
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 2: A Forward-looking View on Catching-up Strategies from an Austrian Angle
Ewald Nowotny1 As is well known, the period since 2008 has been characterized by the global financial crisis. In its early stage, the crisis had been confined to advanced economies, as local and foreign banks in Central, Eastern and South-Eastern European economies were holding only a negligible amount of so-called toxic assets. Yet excessive risk-taking eventually put the financial system as a whole under serious stress, which in turn had an adverse impact on the world economy. The CESEE economies were particularly affected by output declines. These were also caused by accumulated vulnerabilities in the region, especially the credit boom (Backé and Wójcik, 2008; Fidrmuc and Hainz, 2010) and foreign currency lending in many countries (Dvorsky et al., 2010). The output loss, with average GDP decline amounting to –3.5 per cent in new EU member states and around –4 per cent in all CESEE countries in 2009 (IMF, 2010), was deeper than had been expected. The CESEE region did, however, recover fairly quickly in 2010. Therefore, as indicated in the title, this chapter is forward-looking, dealing with catching-up strategies after the crisis. The beginning of 2010 actually featured developments which were better than expected and fuelled the hope that the crisis was already passing away. Nearly all CESEE countries (with the exception of Bulgaria and Romania) were expected to grow during 2010 (Schreiner et al., 2010). This growth in most cases is fuelled mainly by restocking and external demand. At the same time, the forecasts for 2011 and 2012...
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