Eastern Europe's economic growth is bolstered by EU membership

EU

The eight former east European communist nations that joined the European Union in 2004 are growing richer, led by Estonia, while Italy and Portugal lost ground.

The EU's newest members, among the poorest in the 25-nation EU all increased GDP per capita in 2005, according to Eurostat, the EU's statistical arm. Per-capita GDP in Estonia, a former Baltic Soviet republic, climbed to 60% of the EU average last year, up from 53% in 2004, the biggest jump in the eight-country group. Growth in the newest members is outpacing expansion in western Europe as cheaper labor and land is attracting investment after they joined the world's biggest free-trade region. The economies of the eastern members grew at an average annual pace of 7.6% in the Q3, compared with 2.7% in the 12 countries sharing the euro. Latvia, with the fastest-growing economy in the EU, is the poorest in the EU and ranks last by per capita GDP. Still, its GDP per capita soared to 48% of the EU average last year, compared with 44% in 2004 and 41% in 2003. Poland and Lithuania averaged at about 50% of the EU average, while the Czech economy reached 74% of the European average, making it the second richest of the eight economies.

Growth in the new EU states has led to accelerating inflation and delays in adopting the euro. The average inflation rate in the euro zone for November was 1.9%, compared with the highest rates in the EU in Hungary and Latvia at 6.4%. Lithuania became the first euro bidder to be rejected to adopt the euro next year. The European Commission said the Baltic nation failed to qualify because inflation is too fast. Countries are changing the euro adoption timetables across the region. Lithuania has set 2010 as a target date for adopting the euro, while the Czech Republic, Estonia, Hungary, Latvia and Poland don't have official target dates.
Slovenia is the only one of the EU's eastern newcomers to adopt the euro next year. The former Yugoslav republic is at the top of the group at 82%, on par with Greece and ahead of Portugal. Five EU's old members including Portugal, Italy, Belgium, Germany and the United Kingdom receded 1 percentage point or more in the year. Portugal slipped back for a second year to 71% of the average, down from 72% in 2005 and 73% in 2004. That makes Portugal poorer than Slovenia, the Czech Republic and Cyprus. (Bloomberg)

ADVERTISEMENT

Job ads in hospitality, tourism sector grow drastically  Analysis

Job ads in hospitality, tourism sector grow drastically 

Lawmakers approve 2022 budget Parliament

Lawmakers approve 2022 budget

Duncan Graham reelected as BCCH president Appointments

Duncan Graham reelected as BCCH president

Budapest launches revamped coupon card for visitors City

Budapest launches revamped coupon card for visitors

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.