Transcript Kein Folientitel

Competitiveness in SEE
and Prospects in the Catching-Up Process:
A Regional Overview
Peter Mooslechner
Director
Economic Analysis and Research Department
Oesterreichische Nationalbank
National Bank of the Republic of Macedonia
Skopje – May 30, 2008
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Oest er r eichische Nat ional bank
Overview
• The Starting Point:
Initial income gap ….. but signs of catching-up
• Underlying factors
• Elements of price and cost competitiveness
• The importance of the regulatory framework
• Factors of SEE competitiveness within Europe:
• Trade integration: Sectoral and geographical aspects
• Current account balance: Structural issues
• SEE: Attractiveness for foreign investors
• Where does the region go to?
…plus some facts on Euroization in SEE
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Income level still lower than in the EU-27, but
income convergence under way…..
GDP per capita at PPP
in % of EU-27
100
90
80
70
60
50
40
30
20
10
0
2007
Source: wiiw.
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M
lb
an
ia
A
on
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ne
FY
gr
o
R
M
Bo
ac
sn
ed
ia
on
&
ia
H
er
ze
go
vi
na
ur
ke
y
T
bi
a
Se
r
ro
at
ia
C
ia
Bu
lg
ar
an
ia
Ro
m
Po
la
nd
Sl
ov
ak
ia
H
un
ga
ry
Re
pu
bl
ic
C
ze
ch
Sl
ov
en
i
a
2000
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….. although it will take some time
GDP per capita in PPP terms:
New EU Member States average as % of euro area average
Annual GDP growth in euro area assumed: 2.0%
100.0
6%
5%
4%
90.0
Greece (2004)
80.0
70.0
Portugal (2004)
Greece (1981)
60.0
Portugal
(1986)
50.0
Source: Eurostat, OeNB.
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2040
2036
2032
2028
2024
2020
2016
2012
2008
2004
40.0
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Most countries gained shares on world markets
Market Share in W orld Imports
in %
1.0
2007
0.9
0.8
0.7
0.6
2000
0.5
0.4
0.3
0.2
0.1
0.0
Poland
Source: IM F.
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Czech R. H ungary Slovakia Romania Slovenia Bulgaria Croatia
BiH
FYR
Albania
Macedonia
Serbia
(incl.
MN E)
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Some Basic Factors Driving
Competitiveness
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Broadly stable real exchange rates in SEE …
Real exchange rates - EU R per N CU (PPI deflated)
Index, 2000 = 100
200
180
160
140
120
100
80
2000
2002
2003
2004
2005
2006
2007
Czech Rep.
H ungary
Poland
Slovakia
Slovenia
Bulgaria
Romania
Croatia
Macedonia
Albania
BIH
Serbia
Source: WIIW.
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2001
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… but rising ULC across the region
U nit Labor Costs
PPP adjusted, Austria=100
Data for Turkey not available.
8
M
R
FY
lb
an
ia
A
ac
ed
on
ia
ne
gr
o
on
te
M
ze
er
H
&
B
os
ni
a
Source: wiiw.
go
vi
na
Se
rb
ia
ro
at
ia
C
B
ul
ga
ri
a
ia
Sl
ov
ak
y
un
ga
r
H
R
ep
ub
lic
C
ze
ch
Po
la
nd
R
om
an
ia
2000 2007
Sl
ov
en
ia
80
70
60
50
40
30
20
10
0
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Clear improvements of the institutional framework
EBRD T ransition Indicators (overall transition score)
4.50
2007
1997
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
C
Source: EBRD.
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ne
gr
o
on
te
Bi
H
M
ze
ch
H
un
ga
r
y
Re
pu
bl
ic
Po
la
nd
Sl
ov
ak
ia
Bu
lg
ar
ia
Ro
m
an
ia
Sl
ov
en
ia
C
ro
FY
at
R
ia
M
ac
ed
on
ia
A
lb
an
ia
Se
rb
ia
0.00
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Competitive Advantages of SEE Countries
• Critical issue: „Hard factors“ point more towards a
certain loss in price competitiveness
• But „soft factors“ draw a more favourable picture:
• Continuously improving infrastructure supports
trade with the EU markets
• Geographical location, closeness to the enlarged EU
• EU accession process
• Progress in regional cooperation and integration
• Attractiveness for FDI
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The Competitive Position of
SEE within Europe:
Elements of a Dynamic View
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Progress in Trade Integration
Exports of Goods and Services
in % of GDP
2000
2007
H
&
Note: Montenegro, FYR Macedonia, BiH, Serbia, Albania data of 2003 instead of 2000. In 2003, Serbia and Montenegro are not
considered separately.
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ur
ke
y
T
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an
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A
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Se
r
er
ze
go
vi
na
ro
at
ia
C
on
te
ne
FY
gr
o
R
M
ac
ed
on
ia
Ro
m
Po
la
nd
ia
Bu
lg
ar
a
an
ia
M
Bo
sn
ia
Source: wiiw.
Sl
ov
en
i
Sl
ov
ak
ia
H
un
ga
C
ry
ze
ch
Re
pu
bl
ic
90
80
70
60
50
40
30
20
10
0
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Higher Share of Intra-Regional Trade
SEE export shares by partners
in % of total exports
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51.9
47.2
20
15
10
5
0
2000
adv EU
Source: UN COM TRADE.
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coh EU (PT , GR, ES)
2006
N MS-10
SEE (incl. BG, RO)
TR
ROW
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SEE export shares by commodities, 2006
in %
2.5
2.0
1.5
1.0
0.5
0.0
Fuels,
lubricants,
etc.
Source: UN COM TRADE.
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Chemical
products
Misc.
Manufactured Machines and
manufactured
transport
goods
articles
equipment
T otal
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Need for Structural Upgrading in the Medium Run
Revealed Comparative Advantages of SEE on advEU Market
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Fuels, lubricants,
etc.
Chemical
products
Manufactured
goods
Machines and
transport
equipment
Misc.
manufactured
articles
A positive deviation from 1 implies a comparative advantage in the respective commodity group, a
value below 1 points towards a weak competitive position.
2000
Source: UN COM TRADE, own calculations.
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2006
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Technological Upgrading is Taking Place, but
Structural Differences Remain
Technological content of exports (2000-2007)
in % of classified exports (covering around 90% of total exports)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
Czech R.
Hungary
Low-tech/resource-based
Source: Eurostat, OeNB.
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Poland
Low-tech
Slovenia
Slovakia
Medium-tech
Bulgaria
High-tech
2000
2001
2002
2003
2004
2005
2006
2007
2000
2001
2002
2003
2004
2005
2006
2007
2000
2001
2002
2003
2004
2005
2006
2007
2000
2001
2002
2003
2004
2005
2006
2007
2000
2001
2002
2003
2004
2005
2006
2007
2000
2001
2002
2003
2004
2005
2006
2007
0.0
2000
2001
2002
2003
2004
2005
2006
2007
10.0
Romania
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The Permanent Challenge of
Trade and
Current Account Balances
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T rade Flows (left axis) and T rade Balance (right axis) of SEE
in Mio USD
140,000
0
120,000
-10000
100,000
-20000
80,000
-30000
60,000
-40000
40,000
20,000
-50000
0
-60000
2000
2001
Exports
Source: UN COM TRADE.
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2002
2003
Imports
2004
2005
Balance
2006
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External Deficits Across the Region
Current Account Balance
in % of GDP
2007
Source: Eurostat, wiiw.
* 2001
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C
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T
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FY
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C
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Po
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2000
Re
pu
bl
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0
-5
-10
-15
-20
-25
-30
-35
-40
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Composition of the combined current and capital account
% of GDP, 2007 (AL, MK and BIH 2006)
30
20
10
0
-10
-20
-30
Bi
H
M
ac
ed
on
ia
lb
an
ia
A
ro
at
ia
C
Sl
ov
en
ia
Sl
ov
ak
ia
Bu
lg
ar
ia
Ro
m
an
ia
Po
la
nd
y
un
ga
r
H
C
ze
ch
R.
-40
Goods and services
Income
Source: National central banks, Eurostat, OeNB.
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T ransfer
Capital account
Current & capital account
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High and increasing FDI stock
FDI Stock per Capita
in EU R
2003
2007
21
er
H
&
bi
a
Se
r
ze
go
vi
na
M
on
te
ne
gr
o
lb
an
ia
A
ur
ke
y
T
M
ac
ed
on
ia
ro
at
ia
B
ul
ga
ri
a
Ro
m
an
ia
Sl
ov
ak
ia
Po
la
nd
Re
pu
bl
ic
H
un
ga
ry
C
R
B
os
ni
a
Source: wiiw.
FY
C
ze
ch
Sl
ov
en
ia
7500
6500
5500
4500
3500
2500
1500
500
-500
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Sectoral structure of inward FDI stock, latest available data
Other
in % of total inward FDI stock
Other services
100
90
Finance
80
70
T ransport, storage,
communication
60
Construction
50
40
Electricity, gas,
water supply
30
20
Manufacturing
10
C
Note: 2006 (CZ, HU, PL, RO, SI, M K), 2005 (BIH), 2004 (AL)
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Se
rb
ia
Mining, quarrying
BI
H
ze
ch
R.
H
un
ga
ry
Po
la
nd
Sl
ov
en
ia
Sl
ov
ak
i
Bu a
lg
ar
ia
Ro
m
an
ia
C
ro
at
M
ia
ac
ed
on
ia
A
lb
an
ia
0
Agriculture,
hunting, forestry,
fishing
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Where does the region go to?
• SEE still with significant cost/price advantage compared to the
European Union
• EU is main trading partner - but low share in total EU imports
points to considerable growth potential
• Trade with the CEE-5 region as well as interregional trade is
rising (and these regions show stronger growth than the
rest of the EU)
• Specialisation of production on low-tech and basic goods sector
faces strong competition from Asian countries (in
particular China)
• Obvious need for technological upgrading to gain in long-term
competitiveness
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Euroization as a particular
Feature of SEE?
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Why Euroization in SEE Countries?
• Competitiveness is not only a question of wages, prices and
productivity – it is also a question of the exchange rate
• Under certain (specific) conditions: Expectations are stabilized
by fixed exchange-rate policies
• Historical experience: Austria’s “hard currency policy” – a
particular example of pegging a country’s currency
• Today: ERM II and Monetary Union
• For most SEE countries the introduction of the Euro is still a
long way to go
• People and policy makers might chose different ways to go
• Euroization is a peculiarity of this region
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The Use of the Euro in Central, Eastern and
Southeastern Europe – Survey Design (I)
 Survey conducted since 1997
Initially 5 Countries (Czech Republic, Hungary, Slovakia,
Slovenia and Croatia) reduced to 4 Countries after Slovenia
joining the Euro Area
 NEW Geographical scope from autumn 2007 on
 6 EU Member States:

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Bulgaria, Czech Republic, Hungary, Poland, Romania and
Slovakia
5 Southeastern European Countries:
Albania, Bosnia and Herzegovina, Croatia, Former Yugoslav
Republic of Macedonia (FYR Macedonia) and Serbia
Oest er r eichische Nat ional bank
The Use of the Euro in Central, Eastern and
Southeastern Europe – Survey Design (II)
 In each country about 1000 persons over the age of 14 are
interviewed (in Poland only the population of the 10 largest cities); 2
waves per year (spring and autumn)
 Overall 26 questions plus socio-demographics, including also
nonregular questions on specific topics (for example on foreign
currency loans)
 Central questions:
■ amounts and composition of foreign currency cash holdings
■ foreign currency denominated deposits
■ as well as motives for holding them
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Share of respondents holding foreign cash
in % of respondents (multiple answers possible)
60
50
40
30
20
10
0
Hungary
Poland
EUR
USD
GBP
OTHER
Quelle: Source: OeNB Euro Survey 2007.
Note: GBP only asked in Poland.
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Slovakia
Czech
Republic
Bulgaria
Romania
BosniaHerzegovina
Croatia
Albania
Serbia
FYR
Macedonia
Oest er r eichische Nat ional bank
Motives for holding euro cash
disagree
agree
Hungary
Czech Republic
Poland
Slovakia
Bulgaria
Albania
Romania
FYR Macedonia
Bosnia-Herzegovina
Croatia
Serbia
-2.0
0.5
0.0
-0.5
-1.0
-1.5
normalized sample means for each country (-3.5 fully disagree, 0 neutral, +3.5 fully agree)
as a general reserve
to make payments in my country
1.0
1.5
to make payments abroad, for holidays
Source: OeNB Euro Survey 2007.
Note: Respondents who held euro cash were asked whether they agree or disagree on a scale from 1 (fully agree) to 6 (fully disagree) to the statement that they
hold euro cash as a general reserve, etc.
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2.0
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Underbanked?
% of respondents with a transaction account or savings deposit
90
80
70
60
50
40
30
20
10
0
Hungary
Poland
Source: OeNB Euro Survey 2007.
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Slovakia
Czech
Republic
Romania
FYR
Macedonia
Bulgaria
Albania
Serbia
BosniaHerzegovina
Croatia
Oest er r eichische Nat ional bank
Did you make any payments in euro during the last 6 months in your country?
in % of respondents
60
50
40
30
20
10
0
Hungary
Poland
Slovakia
Yes, several times per month
Source: OeNB Euro Survey 2007.
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Czech
Republic
Bulgaria
Yes, about once per month
Romania
Croatia
Yes, less frequently
Albania
FYR
Macedonia
Serbia
BosniaHerzegovina
Oest er r eichische Nat ional bank
Summary of First Survey Results
• The euro plays a predominant role in foreign currency
denominated assets held by residents throughout the region.
• In general, euro cash holdings are more important in
Southeastern European Countries than in EU Member
States.
• Key motives to hold euro cash:
– Southeastern Europe, BU and RO as a store of value,
– other EU Member States for holidays and shopping
purposes abroad.
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Oest er r eichische Nat ional bank
Where to find more information…..
■ Focus on European Economic Integration
Main results will be provided in an article on a regularly basis (semi-annual);
first one in FEEI 1/2008 (July)
■ Research and information platform on the internet (July 2008)
 Details on the Survey, sample, technical report, questionnaire
 Selected results and complete list of publications
 www.oenb.at, ceec.oenb.at
■ The International Role of the Euro
Box prepared for the European Central Bank’s report
■ Occasional newsletter on special topics
■ Ongoing research activities
■ Stix, H. 2008. Euroization: What Factors Drive its Persistence?
Household Data Evidence for Croatia, Slovenia and Slovakia. OeNB
Working Paper No. 140.
■ Presentation of papers by Doris Ritzberger-Gruenwald and Helmut Stix at
the Annual Meeting of the Austrian Economic Association 2008
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Oest er r eichische Nat ional bank
Thank you very much for your
Attention!
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