Update on Economic Aggregates South East Europe Investment Compact for South East Europe Private Sector Development Division Directorate for Financial and Enterprise Affairs OECD Update on SEE Economic Aggregates This presentation seeks to update the November 2009 SEE IC meeting on main economic indicators in the SEE region and the changes occurring since the April 2009 meeting. These data cover up to the end of the second quarter of 2009. 2 Update on SEE Economic Aggregates SEE IC team leaders are invited to complement the presentation, where they feel relevant, with updated information on actual or planned crisis response measures. 3 Gross Domestic Product % growth compared to same quarter in previous year 2007=100 4.0 2.0 0.0 Q4.06 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09 Q2.09 Central Europe -2.0 weighted average Baltic States weighted average -4.0 Euro zone weighted average SEE weighted -6.0 average -8.0 4 Gross Domestic Product % growth compared to same quarter in previous year 2007=100 4.0 2.0 0.0 Q4.06 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09 Q2.09 Central Europe -2.0 weighted average Baltic States weighted average -4.0 Euro zone weighted average SEE weighted -6.0 average GDP growth continues to slow in the SEE region – illustrating interdependence with EU countries, which show a similar -8.0 tendency. GDP growth fell more drastically in the Baltic States and Central Europe. 5 Gross Domestic Product % growth compared to same quarter in previous year 15.0 10.0 5.0 Central Europe average 0.0 Q4.06 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09 Q2.09 Baltic States average -5.0 Euro zone average SEE average -10.0 -15.0 -20.0 6 Total SEE Exports to EU-25 4 Position seen at April SEE IC 3.8 Billions EUR Billions 3.6 3.4 3.2 3 2.8 2.6 2.4 2.2 Source : Eurostat 7 Total SEE Exports to EU-25 4 Position seen at April SEE IC 3.8 Billions EUR Billions 3.6 3.4 3.2 3 2.8 2.6 2.4 Trade2.2 with the EU picked up slightly in February 2009 – but was still 13% lower than in February 2008 – and Sourcecontinued: Eurostat to improve, catching-up by June 2009 to levels 8 recorded in the first months of 2008. Industrial Production Percentage change year-on-year 15% Position seen at 10% April SEE IC 5% 0% -5% -10% -15% -20% •Data are a simple average for Bulgaria, Bosnia and Herzegovina , Croatia, Republic of Moldova, Montenegro, FYR Macedonia and Romania. 9 Industrial Production Percentage change year-on-year 15% Position seen at 10% April SEE IC 5% 0% -5% -10% -15% -20% Industrial production continued to slow during the first half of 2009. •Data are a simple average for Bulgaria, Bosnia and Herzegovina, Croatia, Republic of Moldova, Montenegro, FYR Macedonia and Romania. 10 Source 11 : SEE national statistics agencies statistics nationalSEE : - - - - 16 14 12 10 - - - - 0 8 6 4 2 Herzegovina Bosnia and and Bosnia I-2009/I-2008 Retail Trade Turnover Indices Turnover Trade Retail VIII-2009/VIII-2008 Bulgaria QIV-2008/QIV-2007 VII-2009/VII-2008 Croatia I-2009/I-2008 IV-2009/IV-2008 Republic of Republic Moldova I-II-2009/I-II-2008 IX-2009/IX-2008 Romania I-2009/I-2008 VIII-2009/VIII-2008 November SEEIC November seen at Position SEE April IC seen at Position Source 12 : SEE national statistics agencies statistics nationalSEE : weakened consumer confidence. consumer weakened due to region the throughout significantly to decrease continued have consumption privateand spending consumer Domestic - - - - 16 14 12 10 - - - - 0 8 6 4 2 Herzegovina Bosnia and and Bosnia I-2009/I-2008 Retail Trade Turnover Indices Turnover Trade Retail VIII-2009/VIII-2008 Bulgaria QIV-2008/QIV-2007 VII-2009/VII-2008 Croatia I-2009/I-2008 IV-2009/IV-2008 Republic of Republic Moldova I-II-2009/I-II-2008 IX-2009/IX-2008 Romania I-2009/I-2008 VIII-2009/VIII-2008 November SEEIC November seen at Position SEE April IC seen at Position Net Current Transfers 7000 Position seen at April SEE IC 6500 6000 5500 USD million USD 5000 4500 4000 3500 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09 13 Net Current Transfers 7000 Position seen at April SEE IC 6500 6000 5500 USD million USD 5000 4500 Current transfers declined for the first two quarters of 2009, reaching4000 similar levels to those achieved in the middle of 2007. This tendency3500 may be explained by migrant workers losing their jobs inQ1.07 host Q2.07countriesQ3.07 andQ4.07 preparingQ1.08 Q2.08 to returnQ3.08 Q4.08home.Q1.09 14 Total FDI in SEE 9 8 Billions EUR Billions 7 Position seen at 6 April SEE IC Position seen at 5 November SEE IC 4 3 2 1 0 Q1.06 Q2.06 Q3.06 Q4.06 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09 Q2.09 Source : SEE central banks 15 Total FDI in SEE 9 8 Billions EUR Billions 7 Position seen at 6 April SEE IC Position seen at 5 November SEE IC 4 3 2 1 FDI declined in the first half of 2009: total FDI in SEE for the 0 second quarterQ1.06 Q2.06 Q3.06 ofQ4.06 2009Q1.07 Q2.07is stillQ3.07 Q4.07 28%Q1.08 Q2.08lowerQ3.08 Q4.08 thanQ1.09 theQ2.09 volume registered in the first quarter of 2006. Source : SEE central banks 16 Consumer Price changes Percentage change year-on-year Position seen 10% at April SEE IC 8% 6% 4% 2% 0% •Data are a simple average for Albania (quarterly data until third quarter 2008), Bulgaria, Bosnia and Herzegovina, Croatia, Republic of Moldova, Montenegro, FYR Macedonia and Romania. Source : EIU, SEE national statistics agencies 17 Consumer Price changes Percentage change year-on-year Position seen 10% at April SEE IC 8% 6% 4% 2% 0%Growth in consumer prices fell to an average of 1% year-on-year in July 2009. •Data are a simple average for Albania (quarterly data until third quarter 2008), Bulgaria, Bosnia and Herzegovina, Croatia, FYR Macedonia, Republic of Moldova, Montenegro, and Romania. Source : EIU, SEE national statistics agencies 18 Lending and Deposit Rates 16.00% Position seen at April SEE IC 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% SEE Average lending rate SEE Average deposit rate Central Europe Average lending rate Central Europe Average Deposit rate 19 Lending and Deposit Rates 16.00% Position seen at April SEE IC 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% Average0.00% lending and deposit rates rose slightly in the first quarter of 2009. Nevertheless, this tendency seems to be stabilizing forSEE the Average second lending rate quarter. SEE Average deposit rate Central Europe Average lending rate Central Europe Average Deposit rate 20 Manufacturing Production Indices 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Bulgaria Croatia FYR Macedonia Republic of Montenegro Romania Serbia Moldova Feb-09 Apr-09 Jun-09 Aug-09 Indices compare production to production in the same month one year previously with the exception of Serbia, which compares production to the average production of 2008. Source : SEE national statistics agencies 21 Manufacturing Production Indices 120.0 100.0 80.0 60.0 40.0 20.0 Export-oriented manufacturing industries have suffered as demand0.0 from the euro zone has flattened. However, an upward Bulgaria Croatia FYR Macedonia Republic of Montenegro Romania Serbia export trend in the region may helpMoldova revive these industries in the second half of the year.Feb-09 Apr-09 Jun-09 Aug-09 Indices compare production to production in the same month one year previously with the exception of Serbia, which compares production to the average production of 2008. Source : SEE national statistics agencies 22 Exchange rates National Currency Against Euro January 2007 = 100 135 125 RO Currency depreciation SRB 115 ALB 105 95 MD Currency appreciation 85 75 Albanian Lek Bosnian KM Bulgarian Lev Croatian Kuna Macedonian Denar Moldovan Leu Romanian Leu Serbian Dinar 23 Exchange rates National Currency Against Euro January 2007 = 100 135 125 RO Currency depreciation SRB 115 ALB 105 95 MD Currency appreciation 85 In the75 first months of 2009, the appreciation of the Moldovan Leu – pegged to the U.S. dollar – against the euro reflects the appreciationAlbanian of the Lek U.S. dollarBosnian in the KM first part ofBulgarian the year. Lev The Serbian DinarCroatian and Kuna the RomanianMacedonian Leu Denarhave depreciatedMoldovan Leu against the Euro whileRomanian the Leu Albanian LekSerbianhas Dinar been depreciating at a slower rate. 24 Loans to the Private Sector Sep 2008=100 140 120 100 Sep-08 Oct-08 80 Nov-08 Dec-08 Jan-09 60 Feb-09 Mar-09 40 Apr-09 May-09 20 Jun-09 Jul-09 0 BIH BG HRV XK MK MD MNE RO SRB 25 All comments welcome: [email protected] THANK YOU .