Poland Nationalizing its Pension Funds

http://www.forbes.com/sites/steveforbes/2013/09/17/polands-piggish-pols-theyre-not-alone/

Hungary No Longer a High-Income Country

Says the World Bank.

Unemployment Rates in Europe

Here's a map I created yesterday with the latest available data:

Central Europe's Love for Germany

Kristína Mikulová, a fellow at the Center for Transatlantic Relations (and a former correspondent of The Economist), writes for the Huffington Post about the geopolitics of the Visegrád Four countries.

Dates to watch in 2013

11.-12.1. The Czechs elect their president, for the first time by a direct vote 

15.-16.1. Euromoney conference – The Central and Eastern European Forum – will be held in Vienna

14.2. Flash estimates of the 4Q2012 GDP will be released

February - Latvia officially applies for Eurozone membership

19.3. Energy conference "Inside Ukraine" of The Economist magazine to be held in Vienna

22.4. Eurostat published 2012 debt and deficit figures for EU countries

30.4. Slovak Council for Budget Responsibility will publish its first estimate of the country's "net wealth"

2.5. The Governing Council of the ECB will meet in Bratislava, Slovakia

May – ECB's  Convergence Report will most probably conclude that Latvia has met all criteria and may join the Eurozone in 2014

around 20.6. – Eurostat to publish GDP per capita in PPS, the 2012 figures. Slovakia will have matched Portugal and Greece.

1.7. Croatia becomes the 28th member of the EU

around 22.10. – Eurostat will publish estimates whether the countries meet their three-percent public finance deficit targets in 2013

November – TREND magazine awards Slovak firm, bank and an insurance company of the year

Europe according to GDP per capita

Eurostat's data for 2010 supplemented with missing countries (e.g., Ukraine, Kosovo) from the IMF and the World Bank.

Most Productive Regions of the Former Eastern Bloc

Here are the economic centers of Central and Eastern Europe, as seen by the Eurostat and their GDP per capita rank (% of the EU27 average in PPS):

Europe According to Slovaks

My contribution to the "Europe According to" mania :)

Draxler on the elections' results in CZ, SK

http://www.praguepost.com/opinion/4809-the-long-and-winding-road.html

Slovenia, Czech Republic, Slovakia

Twenty years after the fall of the Berlin Wall, Slovenia, the Czech Republic and Slovakia are the three richest countries of the former Eastern Bloc with regard to GDP per person. Yet, their living standars still fall behind their Western-European counterparts'. Whereas Slovenia reaches roughly 62% of the Western-European average, the Czech Republic and Slovakia are only at 41-42%, and the rest of the region lies further down the chart. The Economist reports.

Moving This Blog

As my employer finally managed to upgrade its website, I will be moving much of the future posts from this blog to www.trendanalyses.sk (all articles are also in English). See, for example, our recent texts (1, 2) on distorted inflation figures published by the Slovak Statistical Office. RSS channel will soon be available for the TREND Analyses' homepage. Occasionally, however, there might be issues, links, graphs etc. that appear only in this blog, so please remain subscribed.

Unemployment Increasing Despite Season

Despite little smaller GDP decline in the second quarter as well as favorable summer season, registered unemployment in Slovakia continues to grow. In July, it reached 12.1% of labor force, and is expected to grow in the coming months as well. Current unemployment rate increase (4.6 percentage points annually) is the largest ever, and joblessness is now reaching highest levels since 2004. Strained labor market, where supply of labor abundantly exceeds the demand for it, is caused by global economic crisis, which manifests itself particularly in shrunk foreign demand for local exports. Lower production thus requires considerably fewer workers compared to times of economic boom in 2006-7.

In this context, the proposal of trade unions for increasing the statutory minimum wage by 8.1%, when consumer inflation approaches zero, must be regarded as irresponsible. Considerably increasing the minimum wage in times when many companies operate without any profits could endanger thousands more jobs in the economy.

One Central-European Stock Market?

Corporate finance in Central Europe is dominated by bank lending. However, 94 IPOs on the Warsaw Stock Exchange last year, together with Prague and Ljubljana exchanges being recently acquired by Wiener Börse, point to interesting developments.
For this year, privatization of Warsaw Stock Exchange is planned. This way, the Vienna exchange could theoretically overtake its regional rival and form Europe's eight largest market for shares. Or the acquisition can happen the other way around, with the privatized Polish exchange acquiring Wiener Börse. Nevertheless, for now both exchanges deny the possibility of allowing one to buy the other.
Largest stock exchanges in Europe according to market capitalization are: Euronext, LSE, Spanish exchange, Deutsche Börse and the Swiss exchange.

Capital Bears More of the Crisis Burden than Labor

Share of corporate operating surplus on gross value added. Share of labor compensation is the complement to 100%. Source: Eurostat.

Fed's Exit Strategy

Fed's chairman Ben Bernanke published an article in WSJ explaining the central bank's financial exit strategy after it pumped billions into the economy in an attempt to fight the negative effects of the crisis.
The Fed will need "to tighten monetary policy to prevent the emergence of an inflation problem," Bernanke writes. This should be achieved by eliminating large reserve balances of banks. To do that, the Fed could increase its target for federal funds rate, attracting liquidity back into its own hands. Moreover, in case the federal funds rate does not react sufficiently to the rate Fed will pay on deposited reserves, the Reserve or the Treasury could arrange large-scale "reverse repurchase agreements" - that is, issuing their own securities and sterilizing thus gained liquidity.
The timing and pace of such instrument should best foster Fed's objectives of maximum employment and price stability, the chairman concludes.

NYT Coverage on Slovakia

"Neighbor’s Shadow Still Large in Slovakia". I am not sure the title is really capturing the main issue in the country, but the article provides ample important insights into the happenings in Slovakia.

Top 10 Slovak Companies in 2008

Rank, Name, Industry, Sales in 2008 (individual)

1. Volkswagen Slovakia, automotive, €5.37 billion
2. Slovnaft, oil refining, €4.03 billion
3. Samsung Electronics, electronics, €3.52 billion
4. U.S. Steel Košice, metallurgy, €2.93 billion
5. SPP, gas distribution, €2.90 billion
6. Kia Motors, automotive, €2.23 billion,
7. Slovenské elektrárne, energy, €1.96 billion
8. PCA Slovakia, automotive, €1.74 billion
9. Sony Slovakia, electronics, €1.40 billion
10. Západoslovenská energetika, energy, €1.11 billion

Source: TREND Top 200. Last year's results can be found in our earlier post.

V4 Wages Suffering from Currencies' Depreciation

Currency depreciations pulled down the Euro purchasing power of V4 wages in the first quarter of this year, with the exception of Slovakia, which had a fixed exchange rate to Euro de facto from May 28, 2008. For the first time, thus, average gross salary in Slovakia is not the lowest in Central Europe. Note: the 1q09 value for the Czech Republic is an estimate.

Higher Deficits Don't Help Much

A recent study of the National Bank of Slovakia (NBS) finds fiscal stimuli relatively ineffective.

"An increase of deficit by one percentage point of GDP permanently would increase GDP growth only in the short-term - by 0.4% in the first year, and 0.2% in the following periods. After six quarters, the GDP dynamic would return to its original level. The major effect of such permanent deficit increase would be lasting increase in real interest rates."

The paper by Michal Benčík can be found at the NBS's website (in Slovak).

V4 Currencies: SKK Gone Strong, PLN and HUF Down

This is a graph depicting the purchasing power of Visegrád Four currencies vis-à-vis Euro since November 2005, when Slovak Koruna entered the ERM II system. The figure shows that the Slovak currency has been fixed to Euro at the time when all V4 currencies registered their several-year highs (summer 2008). After criris-related depreciation of CZK, PLN and HUF, this strong conversion rate made Slovakia relatively more expensive to its neighbors, which hampers exports but tames inflation. More information can be found in TREND Analyses' macropresentation.