The Balkans: Problems and Prospects Vladimir Gligorov Sarajevo, 24-25 February

1
The Balkans Problems and ProspectsVladimir
GligorovSarajevo, 24-25 February
2
Contents

• Growth and external imbalances
• Effects of crisis
• Growth prospects
• Regional and EU integration

3
GDP per capita, 2008EUR at PPPs
Source wiiw Annual Database incorporating
national statistics.
4
Real GDP growth in CEE and SEE, 2000 100
Note PCC-4AL,BA,ME,RS. CC-2 HR,
MK. Source wiiw Annual Database incorporating
national statistics.
5
FDI stock, per capita, in NMS and SEEC,
2000-2008, EUR
Source wiiw Annual Database incorporating
national statistics.
6
Industrial production, 2008
Note Until 1998 data refer to Serbia and
Montenegro.
Source wiiw Annual Database incorporating
national statistics.
7
Exports of goods and services (BOP)in of GDP
Source wiiw Annual Database incorporating
national statistics.
8
Unemployment rates, 2007-2009in , annual
average, LFS
Source wiiw Database.
9
The main problem

• Weak tradeable sector
• External imbalances
• Low domestic savings

10
GDP growth rates, 2005-2010year-on-year, growth
in
Source wiiw Annual Database incorporating
national statistics.
11
Industrial production growth, 2005-2010year-on-ye
ar, growth in
Source wiiw Annual Database incorporating
national statistics.
12
GDP developments - change in against preceding
year
wiiw forecasts
2
0.5
-8.5
-6.2
8.2
6.2
6.3
Romania
5
3.0
1.5
5.4
6.7
8.0
6.2
Albania
1
-1
-3.0
.
.
5.4
6.0
Bosnia H.
2
-1
-5.0
-3.5
.
8.1
10.7
Montenegro
2
1.0
-3.5
-4.1
7.6
5.4
6.9
Serbia
13
Industrial production very slow
recoveryIndustrial production, July 2008 100
not seasonally adjusted.
Source wiiw Database.
14
Foreign trade very weak recovery
EUR million, 2008-2009
Source wiiw Database, Eurostat.
15
Foreign trade exports flat
EUR million, 2008-2009
Source wiiw Database, Eurostat.
16
Exchange ratesFlexible exchange rate drastic
real depreciation after September 20082008-2009,
EUR NCU, Jan. 2008 100
Values over 100 indicate appreciation over
January 2008.
Source wiiw Database, Eurostat.
17
Exchange ratesDe-facto fixed exchange rate
modest real depreciation after September 2008
2008-2009, EUR NCU, Jan. 2008 100
Values over 100 indicate appreciation over
January 2008.
Source wiiw Database, Eurostat.
18
Exchange ratesCurrency board or euro as legal
tender minor real depreciation after September
20082008-2009, EUR NCU, Jan. 2008 100
Values over 100 indicate appreciation over
January 2008.
Source wiiw Database, Eurostat.
19
Consumer prices, 2008-2009August 2008 100
Source wiiw Database, Eurostat.
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Integration

• Regional cooperation trade and investment
  Resenstein-Rodan big push policies wider region
• European Union perspective key for stability
  and also regional cooperation

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Conclusions

• There are no quick fixes
• Growth model has to be reconsidered due to
  sustainability and feasibility issues
• Savings will have to be increased and consumption
  will have to grow slowly if at all in the medium
  term
• Economic policies will have to be changed and
  structural reforms wil be necessary with the aim
  to change the real exchange rate