Transition Report 2013 Stuck in transition?

Macro 180sq

Facts at a glance

IN 27 countries out of 34 in the transition region GDP growth slowed in 2012.

ABOVE 20% Remittances as a share of GDP in Tajikistan, Kyrgyz Republic, and Moldova.

Cover 180sqV2


ABOVE 50% Youth unemployment rates in parts of south-eastern Europe.

ABOVE 15% Loss of foreign bank funding as a share of GDP in countries most affected by deleveraging since the third quarter of 2011.

Macroeconomic overview

Stable inflation

Consistent with an environment of depressed demand, inflation has continued to fall in most CEB and SEE countries, dipping below two per cent in the first half of 2013. The exception was Serbia, where prices spiked due to a poor harvest, pre-election fiscal loosening and an increase in value-added tax. Inflation also edged up in some countries in eastern Europe and the Caucasus (EEC) and Central Asia – particularly Armenia and the Kyrgyz Republic – but remains low by historical standards. Supply shortages and the removal of subsidies have contributed to rising inflation in the SEMED region. Egypt, in particular, experienced a sharp increase in prices in the first half of 2013 as the depreciation of its currency continued to raise the cost of imports.

World food prices have been an important determinant of headline inflation in many transition countries in recent years (see Chart M.6). The recent moderation of inflation in EEC and Central Asian economies, where food constitutes a large share of the consumer price index (CPI) basket, is partly attributable to relative stability in global prices.

Chart M.6

Source: National authorities via CEIC Data, and the Food and Agriculture Organization of the United Nations (FAO).
Note: The chart shows year-on-year growth rates for the FAO world food price index and consumer price indices. Regional averages are unweighted. *The EEC+CA average excludes Belarus, which saw inflation exceed 100 per cent in 2011.