New EU-Members : Deep recession, but improving prospects

- 2009, N.4

18/11/2009

In the New Member States (NMS) of the European Union, the recession continued in the second quarter of 2009, and on a regional average, real GDP dropped by 4.8% compared with the second quarter of last year.

The largest NMS economy, Poland, however keeps resisting the negative growth impacts of the international crisis. In sharp contrast, the Baltic economies declined dramatically : their GDPs fell by around 15-20%. Here, growth and particularly consumption as well as labour market trends are alarming, and we expect a double-digit fall for the whole of 2009.

The GDP decline is less pronounced in the other NMS, the expected fall for the whole of 2009 is between 3-6%, which thanks to the positive performance of the Polish economy implies a GDP drop of 3% for the regional average. Economic growth will be at a low level also in 2010 (around 1.5%) and a stronger upturn can be expected only for 2011.