By UNITED PRESS INTERNATIONAL
Published July 21, 2005
WASHINGTON -- Economic performance slowed in eight of the European Unions newest members during the first half of 2005, says a new World Bank report.
According to the EU8 Quarterly Report issued by the World Bank, despite an increase in accession-related investments, exports, output growth and prices, the eight new members of the Central European and Baltic countries -- the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic, and Slovenia -- exhibited a weaker gross domestic product performance across the region than previous quarters after accession. Slower output growth prompted by weaker domestic demand was evident in all countries except Estonia............
............ Inflation and fiscal targets remained largely on track in the countries due to the base-level price increase as the countries prepared to join the EU.
The report found farmers were the greatest beneficiaries of the accession, finding higher prices for their agricultural goods and registering increased sales, as well as the benefit of falling under the EU subsidy program of the Common Agricultural Policy. However, the report found there is still a pressing concern to reform certain social spending programs, and companies that had not restructured in the pre-accession period were probably more vulnerable to market competition.
"The pre-accession period created a crucial window of reform opportunity that may be closing quickly after EU entry. Companies, individuals and governments that did not take adequate advantage of this opportunity may take longer now to catch up to average EU living standards," said the principal author of the study, Thomas Blatt Laursen.
Laursen said it would require more than an increase in financial assistance from the EU to bolster these economies and ensure fiscal and economic health.
"Catching up will require more than an infusion of EU transfers, including because some new member states have limited absorptive capacity," Laursen stressed. "Further efforts to secure macroeconomic stability and continued structural reforms to boost the investment climate and enhance labor market flexibility are also needed."
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