ECONOMIC SURVEY OF EUROPE

Transcription

1 Economic Commission for Europe Geneva ECONOMIC SURVEY OF EUROPE 2005 No. 2 Prepared by the SECRETARIAT OF THE ECONOMIC COMMISSION FOR EUROPE GENEVA UNITED NATIONS New York and Geneva, 2005

2 NOTE The present Survey is the fifty-eighth in a series of annual reports prepared by the secretariat of the United Nations Economic Commission for Europe to serve the needs of the Commission and of the United Nations in reporting on and analysing world economic conditions. The Survey is published on the sole responsibility of the Executive Secretary of the ECE and the views expressed in it should not be attributed to the Commission or to its participating governments. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. The analysis in this issue is based on data and information available to the secretariat in mid-june. UNITED NATIONS PUBLICATION Sales No. E.05.II.E.17 ISBN ISSN Copyright United Nations, 2005 All rights reserved Printed at United Nations, Geneva (Switzerland)

3 iii CONTENTS Page Explanatory notes... Abbreviations... Foreword... vi vii ix THE ECONOMIC SITUATION IN THE ECE REGION IN MID The global context Western Europe and the new EU (i) Western Europe... 5 (ii) The new EU member states South-east Europe The Commonwealth of Independent States (i) Russia and other European CIS countries (ii) The Caucasian rim (iii) The central Asian CIS economies Foreign trade and payments in eastern Europe and the CIS (i) Balance of payments and external financial flows (ii) The trade of eastern Europe and the CIS The short-term outlook STATISTICAL APPENDIX... 57

4 iv LIST OF TABLES Table Page 1.1 Quarterly changes in real GDP in the major industrialized economies, QI Quarterly changes in real GDP and major expenditure items in the United States, QI Changes in quarterly real GDP and main expenditure items in the euro area and the three major economies, QI Fiscal policy impulses in the euro area, Quarterly real GDP and industrial output in the new EU member states, QI Inflation, industrial wages and unit labour costs in the new EU member states, Employment and unemployment in the new EU member states, QI Changes in real GDP in south-east Europe, QI Consumer and producer prices in south-east Europe, January 2003-May Wages and unit labour costs in industry in south-east Europe, QI Employment and unemployment in south-east Europe, QI Size of the informal economy in south-east Europe and the CIS, Changes in real GDP in the CIS, QI Volume of retail trade and real investment outlays in selected CIS economies, QI Components of real final demand in selected CIS economies, Consumer and producer prices in selected CIS economies, January 2003-May Wages and unit labour costs in industry in selected CIS economies, QI Employment and unemployment in the CIS, QI The balance of payments for ECE emerging market economies, International trade and external balances of European and CIS countries, QI CIS countries trade with CIS and non-cis countries, Annual changes in real GDP in Europe and North America, Annual changes in real GDP in south-east Europe and the CIS, A.1 Real GDP in Europe, North America and Japan, A.2 Real private consumption expenditure in Europe, North America and Japan, A.3 Real general government consumption expenditure in Europe, North America and Japan, A.4 Real gross domestic fixed capital formation in Europe, North America and Japan, A.5 Real total domestic expenditures in Europe, North America and Japan, A.6 Real exports of goods and services in Europe, North America and Japan, A.7 Real imports of goods and services in Europe, North America and Japan, A.8 Industrial output in Europe, North America and Japan, A.9 Total employment in Europe, North America and Japan, A.10 Standardized unemployment rates in Europe, North America and Japan, A.11 Consumer prices in Europe, North America and Japan, B.1 Real GDP in south-east Europe and the CIS, B.2 Real total consumption expenditure in south-east Europe and the CIS, B.3 Real gross domestic fixed capital formation in south-east Europe and the CIS, B.4 Real gross industrial output in south-east Europe and the CIS, B.5 Total employment in south-east Europe and the CIS, B.6 Employment in industry in south-east Europe and the CIS, B.7 Registered unemployment in south-east Europe and the CIS, B.8 Consumer prices in south-east Europe and the CIS, B.9 Producer prices in industry in south-east Europe and the CIS, B.10 Nominal gross wages per employee in industry in south-east Europe and the CIS, B.11 Merchandise exports of the ECE emerging market economies, B.12 Merchandise imports of the ECE emerging market economies, B.13 Balance of merchandise trade of the ECE emerging market economies, B.14 Merchandise trade of eastern Europe and the Russian Federation, by direction, 1980, 1990, B.15 Exchange rates of eastern Europe and the CIS, 1990, B.16 Current account balances of the ECE emerging market economies, B.17 Inflows of foreign direct investment in the ECE emerging market economies,

5 v LIST OF CHARTS Chart Page 1.1 Selected non-energy commodity prices, January 2000-May Crude petroleum prices, January 2000-June Long-term interest rates in the United States and western Europe, January 2000-June Consumer confidence in the United States, January 2001-May Contribution of major expenditure items to the quarterly growth of real GDP in the euro area, QI Business climate and consumer confidence indicators in the euro area, January 2000-June Real effective exchange rates in the European Monetary Union in Contribution of final demand components to GDP growth in selected new EU member states, Economic sentiment indicator in selected new EU member states, January 2002-May Annual employment growth and employment rates in the new EU member states and candidate countries in Industrial output in selected south-east European economies, January 2002-March Real industrial output in selected CIS economies, January 2002-March Output growth and changes in unemployment in selected emerging market economies, Merchandise trade in eight new EU member countries, January 2001-March Merchandise trade in south-east Europe, January 2001-March LIST OF BOXES Box Page 2.1 Adjustment pressures from changes in international competitiveness The size of the informal economy in the south-east European and CIS countries From consumption-driven growth towards socially inclusive and environmentally sustainable development in the Republic of Moldova... 28

6 vi EXPLANATORY NOTES The following symbols have been used throughout this Survey:.. = not available or not pertinent = nil or negligible * = estimate by the secretariat of the Economic Commission for Europe = break in series In referring to a combination of years, the use of an oblique stroke (e.g. 1998/99) signifies a 12-month period (say, from 1 July 1998 to 30 June 1999). The use of a hyphen (e.g ) normally signifies either an average of, or a total for, the full period of calendar years covered (including the end-years indicated). Unless the contrary is stated, the standard unit of weight used throughout is the metric ton. The definition of billion used throughout is a thousand million. The definition of trillion used throughout is a thousand billion. Minor discrepancies in totals and percentages are due to rounding. References to dollars ($) are to United States dollars unless otherwise specified. The membership of the United Nations Economic Commission for Europe (UNECE) consists of all the states of western Europe, eastern Europe, the Commonwealth of Independent States (CIS), North America and Israel. The term EU-15 refers to the aggregate of the following 15 member states of the European Union: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom. EU-25 refers to the 15 above-mentioned member states plus the 10 countries that joined the European Union in May 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. WECEE comprises the EU-25 plus the countries of Iceland, Norway and Switzerland. EU-8 (central Europe and Baltic states) includes the new member states listed above excluding Cyprus and Malta. For the convenience in presentation, countries are sometimes grouped into the following subregions, based on geographical proximity: Baltic states: Estonia, Latvia and Lithuania; Central Europe: Czech Republic, Hungary, Poland, Slovakia and Slovenia; South-east Europe: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Romania, Serbia and Montenegro, The former Yugoslav Republic of Macedonia and Turkey; Caucasian CIS: Armenia, Azerbaijan and Georgia; Central Asian CIS: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan; European CIS (excluding Russia): Belarus, Republic of Moldova and Ukraine.

7 vii ABBREVIATIONS BBC BIS c.i.f. CIS CMEA CPI EBRD ECB ECE EGPRS EME EMU ERM-2 EU EURIBOR FDI FTA G7 GATT GDP HWWA IFI ILO IMF IT LFS MDG MFN NBER OECD OPEC OPT British Broadcasting Corporation Bank for International Settlements cost, insurance, freight Commonwealth of Independent States (former) Council for Mutual Economic Assistance consumer price index European Bank for Reconstruction and Development European Central Bank Economic Commission for Europe Economic Growth and Poverty Reduction Strategy ECE emerging market economies Economic and Monetary Union Exchange Rate Mechanism-2 (of the EU) European Union euro interbank offered rate foreign direct investment Free Trade Agreement Group of Seven General Agreement on Tariffs and Trade gross domestic product Hamburgisches Welt-Wirtschafts-Archiv (Hamburg Institute of International Economics) international financial institution International Labour Office International Monetary Fund information technology labour force survey Millennium Development Goal most favoured nation National Bureau of Economic Research Organisation for Economic Co-operation and Development Organization of the Petroleum Exporting Countries outward processing trade

8 viii PMI PPI PPP PRGF R&D REER SGP UNECE VAT WTO Purchasing Managers Index producer price index purchasing power parity Poverty Reduction and Growth Facility (of the IMF) research and development real effective exchange rate Stability and Growth Pact United Nations Economic Commission for Europe value added tax World Trade Organization

9 ix FOREWORD In mid-2005, there is a broad consensus of forecasters that the recovery of the global economy will continue at a robust rate in the remainder of 2005 and in 2006, with the United States and China seen to remain the major engines of growth. All major economic regions participate, albeit at different speeds, in the expansion which, despite the monetary tightening in the United States and some other countries, is supported by still abundant global liquidity and, related to that, unusually low real interest rates. The upward trend of oil prices, however, has cast a shadow over this relatively favourable outlook and, if continuing, risks choking off economic growth in the oil importing countries. Other important downside risks have been present for quite some time, and these are mainly associated with the United States large current account deficit and elevated levels of prices in asset markets (housing and bond markets). In the euro area, short-term prospects are for only moderately strengthening activity, largely reflecting the lack of economic dynamism in the three major economies (France, Germany and Italy). Stronger growth of domestic demand is necessary for achieving a sustained and meaningful recovery. Structural reforms need to be continued, but they should be accompanied, to the extent possible, by an accommodative monetary policy to help improve the situation in the labour markets. Eastern Europe, including the new EU member states, continues to experience robust economic growth, which is significantly above the average for western Europe. This favourable performance reflects a combination of strong export competitiveness and solid growth in domestic demand, partly reflecting the ongoing modernization of the physical capital stock. But several countries face the need to reverse their quite high government budget deficits and current account deficits, which otherwise could risk endangering macroeconomic stability. In the CIS, economic growth is also maintaining quite strong momentum. Commodity exporters, especially countries that are specialized in hydrocarbons, will continue to benefit from high world market prices and strong demand in some of their main markets. But strong growth of domestic demand, partly fuelled by the expansionary orientation of macroeconomic policies, has led to rising inflationary pressures in some countries, which need to be checked. A major longer-term policy concern in the CIS remains the diversification of their economic structures, leading to a reduced reliance on the natural resources sector. The rejection of the proposed European Constitution in the referendums held in France and the Netherlands has come as a major shock to policy makers. There appears to be no single dominating motivation for this No vote, which, rather, reflects the interplay of a host of factors. But among them, a relatively important role appears to have been played by concerns about the economic and social consequences of the process of globalization and the intensification of regional integration in Europe. These frictions were also illustrated by the controversy over the European Commission s Services Directive. These fears and concerns should not be taken lightly. While it is important to stress the potential but often only longer-term benefits of these processes, it is also important to acknowledge that there can indeed be considerable adjustment costs involved, especially for sectors that face a sudden surge in competitive imports of goods and services and a significant relocation of activities to countries with lower labour costs. This points to the need for a coherent scheme of transfer payments to help workers to better absorb these shocks in the short run and for training and education to improve occupational mobility in the medium and longer run. Brigita Schmögnerová Executive Secretary Economic Commission for Europe