centrope Regional Development Report 2011 Long-run Growth and Demographic Challenges centrope partners centrope agency Austria centrope coordination office I thematic and operative • Federal Province of Burgenland co-ordination, communication & secretariat: • Federal Province of Lower Austria Europaforum Wien, Rahlgasse 3/2, A-1060 Wien, • Federal Province and City of Vienna [email protected] • City of Eisenstadt • City of St. Pölten centrope local offices I regional project management & co-operation nodes: Czech Republic • South Moravian Region Office Austria I focus responsibility ‘knowledge region’: • City of Brno Regionalmanagement Niederösterreich, • Vysočina Region (observer) [email protected] Regionalmanagement Burgenland, Hungary [email protected] • Győr-Moson-Sopron County Vienna Business Agency, [email protected] • Vas County Office Czech Republic I focus responsibility ‘human capital’: • City of Győr HOPE-E.S., v.o.s., [email protected] • City of Sopron Office Hungary I focus responsibility ‘spatial integration’: • City of Szombathely CEURINA NKft, [email protected] Slovakia Office Slovakia I focus responsibility ‘culture & tourism’: • Bratislava Self-Governing Region Slovenský Dom Centrope, [email protected] • Trnava Self-Governing Region This brochure presents key findings of the centrope Regional • City of Bratislava Development Report 2011 Long-run Growth and • City of Trnava Demographic Challenges. Consortium of the centrope capacity pilot project “Regional Development Monitoring” Austrian Institute of Economic Research Mendel University in Brno, Faculty of Business and Economics Slovak Academy of Sciences, Institute of Economic Research Hungarian Academy of Sciences, West Hungarian Research Institute of the Centre for Regional Studies The Vienna Institute for International Economic Studies Content Introduction: economic development of centrope in the aftermath of crisis and labour market integration 2 Macroeconomic performance: steady recovery, but unassertive forecasts 3 Regional performance of centrope: economic growth, labour productivity and structural change 6 centrope in comparison to other cross-border metropolitan regions: increased competitiveness 9 Demographic development in centrope: running the danger of general labour shortages? 12 Policy conclusions 16 www.centrope.com © centrope 2012 01 ● Introduction: economic development in the aftermath of crisis and labour market integration Since 2009, two major factors have affected the demographic change in centrope. The two central development of centrope. The first of these is the aims of this report are therefore to firstly assess the impact of the macroeconomic crisis and its aftermath; economic development of centrope and its individual the second are the institutional changes regarding regions in the aftermath of the economic crisis of labour mobility in centrope in 2011. Given that both 2009 and secondly to analyse some of the more of these events were viewed with some concern by long-term challenges that the region is currently both analysts and policymakers, this years’ centrope facing. Regional Development Report, apart from providing an update on the economic development of the indi - The brochure at hands provides a summary of the vidual centrope countries as well as the centrope findings of thecentrope Regional Development region and its parts, also deals with long-term growth Report 2011. The full version of the Report can be performance and structural change in addition to downloaded free of charge from the website www.centrope.com ● 02 Macroeconomic performance: steady recovery, but unassertive forecasts assume that recovery continued, though somewhat The centrope countries are more slowly than the previous year, in the Czech operating in an increasingly Republic and Slovakia (by around 1 percentage point difficult macroeconomic in either country), while Austria’s and Hungary’s eco­ environment. nomic growth was higher in 2011 than in 2010, if only slightly in the latter case. With respect to the first aim of this report, a country- As a matter of fact, growth prospects in the last level analysis highlights the difficult macroeconomic quarter of 2011 already started to deteriorate, due to environment in which the centrope countries are softening global demand, widespread fiscal consoli­ currently operating. Culminating in a rather dramatic dation measures as a more or less rational reaction recession in 2009, the economic crisis has left its to the sovereign debt crisis, a tightening of credit traces, and the recuperation phase in 2010 and conditions and a generally low level of consumer 2011 appears to be of little stability. Thus, after the and business confidence. As a consequence, cur­ economic downturn of 2009 in all four centrope rent forecasts suggest that economic growth in the countries, the economy started to grow again in centrope countries will be anaemic in 2012. Again, 2010 and continued to do so in 2011. Yet economic Slovakia will be the fastest-growing country, yet even recovery differed quite markedly between the indi­ its GDP is expected to grow only by around 1.5%. vidual countries. Slovakia tended to grow fastest, at Austria and the Czech Republic will see some posi­ over 4% per year in GDP terms in 2010, and hence tive economic growth at around 0.5% on a year-by- by approx. 1.5 to 2 percentage points ahead of the year basis, while the Hungarian economy is bound to Czech Republic and Austria and by almost 3 percent­ decline by 1%. age points faster than Hungary. The 2011 estimates 03 ● Macroeconomic performance: steady recovery, but unassertive forecasts Table 1: GDP growth in centrope, forecast autumn 2011 2001-2004* 2005-2008* 2009 2010 2011 2012 2013 Austria 1.5 2.8 - 3.8 2.3 3.1 0.4 1.4 Czech 3.4 5.6 - 4.7 2.7 1.8 0.5 2.5 Republic Hungary 4.2 2.2 - 6.8 1.3 1.7 - 1.0 2.0 Slovakia 4.5 7.8 - 4.9 4.2 3.3 1.5 3.0 centrope** 2.4 3.7 - 4.6 2.5 2.6 0.3 1.9 EU-27 1.9 2.2 - 4.2 2.0 1.5 0.0 . Sources: AMECO Database, EU Commission DG ECFIN, autumn 2011; WIFO, wiiw for 2011-2013. * average; ** GDP-weighted average financing conditions for enterprise investment activi­ ties are much more difficult than before the crisis, Forecasts expect instability in given the commercial banks’ attempts to delever­ financial and global markets to age. In sum, this will result in low growth of both continue until 2013. private consumption and private investment levels in centrope in 2012, while Hungary might even face decline. For 2013, greater stability in the financial and global markets is expected, which should have some No economic stimulus is to be expected from the positive effects on confidence levels, hence leading government side, as all centrope countries’ govern­ to higher GDP growth fuelled by rebounding con­ ments are running austerity packages, quite inde­ sumption and investment demand as well as by an pendently of whether the countries have low levels increase in net exports. Consequently, GDP growth of debt, like Slovakia and the Czech Republic, or is expected to tally around 2% to 3% in the Czech whether such a package might be considered to Republic, Slovakia and Hungary and around 1.4% in be somewhat more called for, as in Hungary and Austria. Austria. In any case, the outcome of this develop­ ment is low growth or even decline in public con­ One source of the weak growth in 2012 is the low sumption and investment in 2012. level of internal demand. Consumer and business confidence is currently low (despite some improve­ Finally, foreign demand is subdued due to weaken­ ments in recent months), which might depress invest­ ing global markets; accordingly, GDP contributions ment and consumption expenditures. Additionally, from net exports are in most cases equally moderate. employment levels are decreasing and unemploy­ The exception to this is Hungary, where a devalu­ ment levels are rising, entailing a reduction in aggre­ ing currency plus an improvement in unit labour cost gate wages, which also dampens private consump­ (relative to main competitor countries) are beneficial tion. By way of contrast, countercyclical movements for the exporting sector, so that net exports will ac­ of household savings, as households tend to smooth cordingly grow markedly in 2012 and are also the their consumption over the business cycle, keep only source of growth of the Hungarian economy in demand levels from falling too low. At the same time, this year. ● 04 Macroeconomic performance: steady recovery, but unassertive forecasts Figure 1: Nominal GDP growth in centrope by NUTS 3 regions (1996–2011). Average annual change in % 14 12 10 8 6 4 2 0 -2 -4 Burgenland Austria Lower Vienna South Moravia Győr-Moson-Sopron Vas Bratislava Trnava centrope EU average 1996– 5.5 5.8 4.6 2.0 12.3 7.9 6.5 4.7 5.1 5.7 2000 2000– 4.2 2.8 2.6 5.0 3.3 3.2 7.0 6.8 3.6 3.6 2004 2004– 1.4 2.0 1.1 4.6 1.0 -2.4 9.1 8.1 3.0 2.1 2009 2009– 1.7 2.2 2.3 1.1 3.4 -1.3 5.3 3.3 2.4 1.9 2011 Sources: Eurostat, Cambridge Econometrics, WIFO calculations. Note: figures show average annual GDP growth at market prices. Data for 2010 and 2011 are based on preliminary estimates. 05 ● Regional performance of centrope: economic growth, labour productivity and structural change The growth rate in is also expected to The centrope region continues centrope remain slightly above the EU average in future years. to present above-average A noticeable exception is the Hungarian region of economic growth, with urban Vas, which is also facing reduced long-term growth areas in particular showing and is expected to grow by less than 1% annually high resilience to the crisis.