South East Europe Regional Economic Report (SEE RER) No. 2 Poverty Reduction and Economic Management (PREM) Europe and Central Asia (ECA) Region. The World Bank June 5, 2012. Outline. SEE6: DEVELOPMENTS, OUTLOOK, CHALLENGES TOWARD ‘GOLDEN GROWTH’ IN SEE6.
South East Europe Regional Economic Report (SEE RER) No. 2Poverty Reduction and Economic Management (PREM)Europe and Central Asia (ECA) Region
The World Bank
June 5, 2012
I. SEE6: DEVELOPMENTS, OUTLOOK, CHALLENGES: Global context
The world still faces several challenges.
higher oil prices,
reduced capital inflows,
high-income country fiscal and banking-sector consolidation
Most developing economies have fully recovered from the crisis.
But second half of 2011 saw slowdown generating major uncertainty for global economy going forward with possible further contagion.
Early 2012 signals positive, but turmoil in May
Risk of intensification of the Greek crisis and wider contagion
OUTLOOK FOR SEE6GLOBAL OUTLOOK--Bottom will come in 2012, growth weak thereafter
Outlook: SEE6 Growth Will Bottom Out in 2012 at 1.1% before recovering to 2.6% in 2013
Key policy challenges in 2012-13: Fiscal and Public Debt
Slower growth in 2012
Public debt level and dynamics MNE, SERB, ALB
Wage bill and pensions (esp. BIH)
Financial discipline and public sector arrears (MNE, ALB, MKD)
Elections in SERB, MNE (2012) and ALB, MKD(2013)
Special Fiscal issues: Arrears and Guarantees
Arrears emerging in SEE6
Private sector (MNE, ALB, MKD)
Public sector (ALB, MKD); Municipal (MNE)
Combination of weakness in revenue administration, control over municipal finances, commitment controls, credit tightness
State guarantees--important in some countries (e.g., MNE, SRB)