The SEE-6 countries experienced strong growth prior the crisis mostly driven by domestic demand, being supported by rapid credit growth and capital inflows from abroad. In the first wave of the crisis they remained quite stable, although being affected mainly through the export channel and reduced capital inflows that undermined their growth model.
Growth acceleration remains a main challenge for the SEE-6 region, yet the scope for growth-oriented macroeconomic policies is rather limited. The fiscal scope for a countercyclical response is rather narrow and the fiscal adjustment is expected to take place as a necessary precondition for medium-run sustainability. In addition, there are constraints on conventional monetary policy, although the unconventional measures can be undertaken in a countercyclical manner. The soundness of the banking system is considered to be one of the main strengths of the region, and there is room for the banking system to support growth further. Enhancing structural reforms, strengthening competitiveness and allocating or attracting capital in the tradable sector will be key priorities of the region in devising a new sustainable growth model.
Angelovska Bezovska, A. (2012), ‘South Eastern Europe: effects of the crisis and way forward’, presentation, Belgrade, available at http://www.nbrm.mk/.
Fujita, K., K. Ishi and M. Stone (2010), ‘Exiting from monetary crisis intervention measures’, IMF Background Paper, available at http://www.imf.org/external/ np/pp/eng/2010/012510.pdf.
Ishi, K., M. Stone and E.B. Yehoue (2009), ‘Unconventional Central Bank measures for emerging economies’, IMF Working Paper WP09/226, available at http://server6.kif.re.kr/KMFileDir/129004004614378750_IMF%20wp09226. pdf.