Chart of the Week: Central and Eastern Europe Close the Gap
IMF Blog, May 22, 2017
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- Authors: The Editors
- Published: May 22, 2017
Regional growth and output gaps
- Most countries of Central, Eastern, and Southeastern Europe will see their economies humming away at a strong growth rate in 2017.
- The output gap is used as the measure of success: the difference between current production and production at full capacity.
- A recently published report on the Central, Eastern, and Southeastern European region shows how close these economies come to performing at full potential.
Aggregate composition and countries operating below capacity
- Turkey accounts for 21 percent of GDP in the region.
- Turkey and Russia together account for 62 percent of GDP in the region.
- Turkey appears to operate somewhat below capacity because of insufficient investment.
- Russia appears to operate somewhat below capacity because of insufficient demand.
Countries at or above full capacity
- Most of the Baltic countries, Central Eastern Europe, and Southeastern Europe are around full capacity, or have even surpassed it.
- Unemployment rates in these economies have declined to pre-crisis lows.
Countries well below full capacity
- Belarus, Bosnia and Herzegovina, and Ukraine are still far from going full throttle.
Labor market, wages, and inflation dynamics
- Surpassing full capacity usually brings with it rising wages as the available workforce dwindles.
- Inflation also tends to rise because consumers’ demand for products and services increases.
- Despite widespread closure of the output gap, growing wages, and a less idle workforce everywhere but in Turkey and the Commonwealth of Independent States, prices have not gone up significantly in the region.
- This muted inflation is partly attributed to still low imported inflation from the euro area.
Chart of the Week: Central and Eastern Europe Close the Gap — The Editors, May 22, 2017
Content in this bundle
- Диаграмма недели. Центральная и Восточная Европа закрывают разрыв. Блог МВФ; 22 мая 2017 года
