Double-dip recession over, yet no boom in sight

Recession in the euro area continues to retard export performance of countries in Central, Eastern and Southeast Europe (CESEE). Impressively strong in both 2010 and 2011, those countries’ export growth decelerated markedly and, in some cases, even went into reverse the year thereafter.

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THE VIENNA INSTITUTE FOR INTERNATIONAL ECONOMIC STUDIES (WIIW)

Vasily Astrov

VASILY ASTROV

ECONOMIST at THE VIENNA INSTITUTE FOR INTERNATIONAL ECONOMIC STUDIES (WIIW)

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Euro area recession dragging exports down...
 
 
Growth dynamics in the export markets is an important factor governing the CESEE countries’ export performance: it explains over half of the cross-country variations observed. For example, the recession in the euro area has obviously had more of a dampening effect on the new member states (NMS) in Central Europe, where more than 50% (in the Czech Republic over 60%) of their exports go to the euro area, rather than on countries such as Ukraine, Turkey and the Baltic states, whose trade dependence on the euro area is considerably lower. 
 
 
Furthermore, divergent growth performance within the euro area has also mattered. In the NMS in Central Europe that trade mostly with Germany, export growth has remained in low single digits, whereas in most Western Balkan countries that trade more with crisis-torn Greece and Italy, it has turned negative, with declines of up to 15% in Montenegro and Kosovo. 
 
At the same time, tourism in Croatia and Montenegro, which in both countries is at least as important as industry, has continued to thrive, more than compensating for the shortfalls in the export of goods.
 
By way of contrast, Latvia and Lithuania, which trade more with Russia, recorded double-digit export growth, as did energy-exporting Russia and Kazakhstan. 
 
However, the relatively high export growth in euro terms recorded by the latter two countries should not be over-interpreted, as it reflects to a large extent the weakening of the euro against the US dollar. 
 
In dollar terms (the currency in which energy exports are typically invoiced), export growth in both countries was much lower.
... and industrial production as well
 
By and large, the dynamics of industrial production in the CESEE countries has mirrored their export performance (see Figure 2). Interestingly, the cross-country differences to be observed in the geographic pattern of exports have a visible impact on the performance of individual industries and, in some cases, individual producers – at least when it comes to more sophisticated industrial branches such as the manufacture of transport equipment.
 

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COMMENT ON THIS ARTICLE:

  • Michael
    17.06.13 ora 06:20
    gISzIMVgMEW

    Hopefully, the French game was a bit more exciting than the stfiknests that were the games this weekend.Oh, and I'd say that you're spoiling it for those of us who are DVRing the matches, but at least you didn't ruin the game that should actually be good yet.





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