Eastern Europe to face economic growth slow down. Romania and Bulgaria- main candidates to hard landing

The extremely favorable conjuncture in the past ten years, which led to an exceptional economic growth in the Eastern Europe countries, will no last for much longer, The Economist predicts in a thorough analysis. Counting the weaknesses of the Eastern Europe states, the publication considers that the growing inflation, the increasing costs with the salaries, the lack of labor force and the poor infrastructure will affect the regional growth. A rough warning is addressed to Romania and Bulgaria, which are the main candidates to hard landing. The main exceptions are Latvia and Estonia, while the main concern is about Hungary.

„It has gone on splendidly for years, and the party isn’t quite finished yet. For a decade or more eastern Europe has benefited from exceptional (and mostly unforeseen) good fortune. Economic and political stability, including for ten countries membership of the European Union, has boosted investors’ confidence and cut borrowing costs. A big pool of cheap and diligent workers, along with the unleashing of entrepreneurial talents, has produced thriving new private businesses. In most countries, growth rates have been stellar (see chart).

Inevitably, it could not last. Wage costs are creeping up. Labour shortages are biting. Out-of-date infrastructure, such as Poland’s notorious roads, is clogging trade. In several countries inflation is rising. And world markets, both for raising capital and for exporting, are looking tougher.”, The Economist reads.

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