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Public relations section
In May 2004, Poland, the CzechRepublic, Slovakia, Hungary, Slovenia, Estonia, Latvia, Lithuania, Cyprus and Malta joined the European Union (EU). Ten years later, the analysts of Raiffeisen Research look at the performance of the five Central European (CE) member countries (Poland, the CzechRepublic, Slovakia, Hungary and Slovenia) in a special report and conclude that the EU enlargement was a success story – not only for the CE region, but also for Austria. “Although it was the largest single expansion in the history of the EU in terms of number of new member countries and people, it only added 4.8 per cent to the total EU GDP. Nevertheless, the enlargement was of immense importance for the economic development of the five new CE member states”, says Gunter Deuber, Head of CEE Bond and Currency Research at Raiffeisen Bank International (RBI) and main author of the special report.
The share of the five CE countries in the total EU GDP rose from 4.2 per cent in 2004 to 5.7 per cent in 2013. The average GDP per capita (at Purchasing Power Parity) in CE, compared to the EU average, has increased by 12 percentage points since 2004. Also, the share of the CE region in the EU world market export increased from 6.2 per cent in 2004 to 9.7 per cent in 2013. Other indicators like low unemployment rates, solid public debt positions, fairly stable sovereign ratings or solid banking sector developments also confirm the high degree of through-the-cycle resilience in major CE economies and the past quality of the growth in the region.
“As about 80 per cent of the regional GDP in CE stems from Poland, the CzechRepublic and Slovakia, the recent economic and political turbulences in Hungary and Slovenia only had a small impact on the region's overall success story. Given its solid performance, it is no surprise that financial markets are pricing most CE countries fairly close to so-called “core” euro area countries. That said, the 10th anniversary of the EU expansion to CE should result in the shelving of thinking in terms of an “East-West-divide” inside the EU”, Deuber summarizes the positive development of the CE region over the past decade.
In absolute terms, the Austrian economy is one of the biggest investors in Central and Eastern Europe (CEE) in general and in the CE region in particular. Austria represents some 13 per cent of total FDI of Western European countries in CE, while the share of Germany stands at 20 per cent. Trade with Austria represents around 4 per cent of total trading volumes in the whole CE region, with an especially high involvement in its direct neighboring countries the Czech Republic, Slovakia, Hungary and Slovenia. In the banking sector, Austria's relative position is even stronger than in the real economy, as in the CE region Austrian banks represent about 20 per cent of total banking exposures of Western banks, compared with 14 per cent relating to German banks.
The current forecasts for GDP growth in the CE region of 2.5 per cent (2014) and 2.8 per cent (2015) are not only well above the CEE average (1.2 per cent in 2014 and 2.0 per cent in 2015) but also significantly higher than the growth forecasts for the euro area (1.5 per cent and 2.0 per cent, respectively). Hence, the positive development in CE will continue to support the Austrian economy, making Austria one of the main benefiters of the EU enlargement of 2004.