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Bloomberg
The economies of the European Union’s eastern members probably got off to a quick start in 2017 as resumed flows of the bloc’s aid and reviving demand from the euro area, combined with household spending, gave them the edge over the rest of the EU.
Preliminary gross domestic product data will show first-quarter expansion accelerated from the previous three months in the Czech Republic, Hungary, Poland and Slovakia, according to the median estimates of annual growth in Bloomberg surveys.
Romania probably led the way, despite a slowdown to 4.5 percent from a gain of 4.8 percent in the fourth quarter. Even at the bottom of the pack, the Czech economy outpaced the euro area, the region’s main trading partner, with an annual increase projected at 2.3 percent.
“The drag on construction sectors from last year’s fall in EU structural fund inflows has now generally faded across the region,†Liam Carson, an analyst at Capital Economics Ltd. in London, said by email. “At the same time, on the back of improved sentiment in the eurozone, industrial sectors have generally strengthened and consumers were supported by tight labor markets and accommodative fiscal policy.â€
The former communist nations, with a combined economic output of about $1 trillion, are benefiting from export demand fueled by an ongoing recovery in the euro area. At the same time, the resumed flow of EU assistance is reviving construction, and falling unemployment and expansionary fiscal policies support household spending.
While that brightens the region’s near-term growth prospects, its expansion is then set to slow as it runs up against capacity constraints, the International Monetary Fund warned last week.
Still, the IMF sees growth in developing Europe picking up to 3.3 percent next year from 3 percent in 2017, compared with increases of 1.6 percent and 1.7 percent in the euro area. The currency union’s expansion was probably unchanged at 1.7 percent in the first quarter, according to a separate Bloomberg survey.