High Growth Continues, with Risks of Overheating on the Horizon
by Vladimir Gligorov, Sándor Richter et al.
Series: Research Reports, No. 341, July 2007
In 2008 high GDP growth will continue in the NMS, except for Hungary. Nevertheless, in all but two countries (the Czech Republic and Hungary) growth rates are predicted to be somewhat lower than, or equal as, in the current year, because of constraints on further acceleration of the current rapid pace of growth. Supply-side constraints on further expansion will be felt especially because of a tight labour market. There are risks of overheating in Bulgaria, Romania and the Baltic States. Only in Slovakia does very high growth seem to be sustainable, at least over the next two years. Pressures arising from an increasingly tight labour market will be counterbalanced by further currency appreciation and the inflation will remain relatively low.
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