A New Model for Balanced Growth and Convergence Achieving Economic Sustainability in CESEE Countries
Achieving Economic Sustainability in CESEE Countries
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 15: Banking in CEE: less growth, more balance
Central Eastern European (CEE) economies are no longer at the centre of the financial storm as it was the case in 2008–2009, when many CEE countries were under the fire of rating agencies and had to ask for the support of the International Monetary Fund (IMF). Growth has regained some strength, too. However, the recovery has been more sluggish in many of the CEE economies than in other emerging markets; moreover, the CEE countries are, at least indirectly, exposed to the sovereign debt crisis in the euro area: they feel the effect of the financial stress (and economic slowdown) spilling over from the western part of Europe. Following the recent economic and financial crisis, Western Europe experienced a weakening of growth momentum and an increase of market pressure related to the debt vulnerabilities in the so-called ‘peripheries’. The country picture is highly heterogeneous: while Germany and France showed a positive gross domestic product (GDP) development (following the relevant drop in 2009), Italy and Spain are facing severe recessions. Crisis countries (such as Italy and Spain) as well as ‘programme countries’(Greece, Ireland, Portugal) are taking measures to reduce their deficits, but this is having an impact in terms of growth for the whole euro area.
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