EBRD downgrades Hungary on “unsettling” policies [video]

EU

The European Union convergence process in most former communist-led member states including Hungary threatens to stall or halt altogether according to the European Bank of Reconstruction and Development (EBRD)’s latest Transition Report...

EBRD economists say that without further improvements in economic and political institutions, the convergence process, whereby developing economies gradually align with the most advanced economies, will stall in some countries, and will slow to a crawl in many others. Only central Europe and the Baltic states would then reach or exceed, within 20 years, 60% of average per capita incomes in the 15 countries that were EU members before its expansion into former communist Europe.

For the EBRD, that region includes Poland, Hungary, Slovakia, Slovenia, Croatia, as well as Latvia, Lithuania and Estonia.

While still in the leading pack among 66 emerging, mostly former communist, countries in the space of activity of EBRD, Hungary was downgraded on several scores in this year’s ‘Transition Report’ of the European Bank for Reconstruction and Development (EBRD), published yesterday.

From six overall country-level transition indicators, Hungary received a score of 4, down from 4+ last year, on price liberalization, while its trade and foreign exchange system also merited a 4 instead of 4+ last year, and competition policy was downgraded to 3+ from 4.

Opposition to market-friendly reforms has been especially detectable in central and east Europe since the onset of the global crisis, and Hungary is among the “unsettling examples,” EBRD Chief Economist Erik Berglof said at a press conference introducing the report.

The EBRD highlighted that “in Hungary an increasing number of investor-specific strategic agreements have fostered fears of discrimination and incurred a downgrade for trade and foreign exchange liberalization.”

In the video clip recorded before release of the report, Beglof briefly explains the concept of “Stuck in Transition” after the worst overall economic performance since the communist era.

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