After 15 years of economic boom in Central Eastern Europe, during which the countries in the region enjoyed growth levels twice as high as in Western Europe, the development came to an abrupt halt as the effects of the global economic downturn set in by mid-2008. Several states in CEE were struck hard, the main reason being that many of these countries were in a state of rapid development fuelled by foreign capital when the crisis hit.
However, the fundamental conditions for growth remain strong in CEE also after the crisis. Especially so in the reform-oriented countries that had introduced business friendly politics and low tax rates in the run-up of their EU accession. In effect, several countries such as the two largest economies Poland and Czech Republic but also Slovakia handled the crisis surprisingly well. Even the countries hit hardest like Hungary will most likely turn the crisis into an upswing in a few years time.
The strength of the economic system of the CEE region persists. This will give the CEE countries a strong competitive advantage when the global economy starts to grow again and the global competition for jobs intensifies. The overall trend remains – the liberation of Central and Eastern Europe some twenty years ago was not only one of the most important democratic waves in history, but also an economic success story without precedent. Over the past two decades the EU member states in Central and Eastern Europe set themselves on a breathtaking path of strong economic growth that was intensified with EU accession and the current integration in the Schengen area and Eurozone (Slovakia adopted the Euro in 2009).
Low labour costs paired with high-level infrastructural facilities are attracting Western companies. At the same time home-grown firms are attracting global attention. Over the past few years, economic growth in countries in Central and Eastern Europe outpaced global economies, on the whole.
The new EU members have displayed strong and sustained growth over years. And while there was initially a catch-up effect involved, it is also because these states have enacted forward-looking structural reforms. Those reforms included slashing corporate tax rates, deregulating labor markets and largely privatizing their economies. Not for nothing - the implemented reforms yield fruit as they have put the CEE region back on the map of the most attractive marketplaces and investment regions in the world. Therefore: This is the place to be. Now more than ever.
