Economic Survey of Europe, 1999 No. 1, table of contents

CONTENTS

Content	Page
Explanatory notes	viii
Abbreviations	ix
Preface	xi
Chapter 1 OVERVIEW AND SELECTED POLICY ISSUES	1
1.1 The current economic situation in the ECE region	1
1.2 Strong policies and weak foundations	4
(i) Unemployment	4
(ii) Inflation	5
(iii) Trade liberalization	6
(iv) Liberalization of international capital flows	7
(v) Conclusions	10
Chapter 2 THE GLOBAL CONTEXT AND THE SITUATION IN THE WESTERN MARKET ECONOMIES	13
2.1 The global context	13
(i) The broad pattern	13
(ii) Lingering instability in financial markets	15
(iii) The crisis in Brazil	16
(iv) Recent developments in East Asia	17
2.2 The economic situation in western Europe and North America	19
(i) General economic developments	19
(ii) Monetary conditions and fiscal policy	32
(iii) The short-term economic outlook	35
2.3 The start of EMU	37
(i) Introduction	37
(ii) The new institutional framework for monetary policy	39
(iii) Monetary policy goals and strategy	40
(iv) Exchange rate policy	43
(v) Domestic economic policy coordination	44
Chapter 3 THE TRANSITION ECONOMIES	49
3.1 Introduction	49
(i) Expectations and outcomes	49
(ii) Short-term outlook	54
3.2 Issues in transformation policy	55
(i) Policy challenges in the current stage of transition	55
(ii) Monetary policy	60
(iii) Structure, strain and economic adjustment: the crisis in Romania	70
3.3 Output and demand	81
(i) Output	81
(ii) Demand	100
3.4 Costs and prices	110
(i) Introduction	110
(ii) Consumer prices	110
(iii) Producer prices in industry	120
(iv) Wages, unit labour costs and profit margins in industry	120
3.5 Labour markets	125
(i) Recent developments	125
(ii) Effects of transition on the labour force and employment from a gender perspective, 1985-1997	135
3.6 International trade	142
(i) Introduction	142
(ii) Trade of eastern Europe and the Baltic states	143
(iii) Trade of the CIS countries	152
3.7 Balance of payments and external finance	162
(i) Introduction	162
(ii) Current account developments	162
(iii) External financing and FDI	165
(iv) Sustainability of current account deficits	172
(v) Short-term funds, macroeconomic instability and sustainability	179
Chapter 4 FERTILITY DECLINE IN THE TRANSITION ECONOMIES, 1982-1997: POLITICAL, ECONOMIC AND SOCIAL FACTORS	181
4.1 Introduction	181
4.2 Fertility decline to the lowest levels yet observed	182
4.3 Shifts in the age structure of fertility	185
4.4 The spread of extra-marital fertility	186
4.5 Causes of fertility decline	187
(i) From one-party rule to democracy	187
(ii) From slow growth to economic downturn	189
(iii) The spread of western behaviour	191
4.6 Conclusions	193
STATISTICAL APPENDIX	195
LIST OF TABLES
Table	Page
2.1.1 World commodity prices, 1995-1998	14
2.1.2 Annual changes in real GDP in east Asian countries, 1996-1999	19
2.2.1 Real GDP in the developed market economies, 1996-1999	21
2.2.2 Major components of demand in the ECE market economies, 1997-1998	25
2.2.3 Total employment in the ECE market economies, 1995-1998	26
2.2.4 Standardized unemployment rates in the ECE market economies, 1995-1998	27
2.2.5 Consumer price indices in ECE market economies, 1996-1998	29
2.3.1 Comparison of economic indicators for the euro area, Japan and the United States	38
2.3.2 Selected economic indicators for the euro area	42
3.1.1 Basic economic indicators for the ECE transition economies, 1996-1999	50
3.1.2 International trade and external balances of the ECE transition economies, 1996-1998	53
3.2.1 Short-term interest rates in selected transition economies, 1995-1998	64
3.2.2 Monetization in selected transition economies: share of monetary aggregates in GDP, 1995-1998	65
3.2.3 Monetary ratios for selected transition economies, 1995-1998	66
3.2.4 Macroeconomic indicators of Romania, 1990-1998	73
3.2.5 Fiscal and quasi-fiscal deficits of Romania, 1993-1997	76
3.2.6 Government revenues in selected east European economies, 1990-1996	80
3.2.7 Levels of strain in labour market adjustment	81
3.3.1 GDP and industrial output in the ECE transition economies, 1997-1998	83
3.3.2 Share of major sectors in GDP in eastern Europe and the Baltic states, 1993-1998	86
3.3.3 Share of major sectors in GDP in the CIS economies, 1993-1998	87
3.3.4 Growth of industrial output by branch in eastern Europe and the Baltic states, 1997-1998	89
3.3.5 Growth of industrial output by branch in the CIS economies, 1996-1998	96
3.3.6 Gross output of agriculture and construction in the transition economies, 1993-1998	97
3.3.7 Contribution of final demand components to real GDP growth in eastern Europe and the Baltic states, 1994-1998	101
3.3.8 Contribution of final demand components to real GDP growth in selected CIS economies, 1994-1998	102
3.3.9 Composition of final demand in current prices in selected transition economies, 1996-1998	105
3.3.10 Real consumption in selected transition economies, 1995-1998	106
3.3.11 Retail trade in the transition economies, 1996-1998	107
3.3.12 Investment in selected transition economies, 1995-1998	109
3.4.1 Consumer prices in the transition economies, 1997-1998	111
3.4.2 Relative rent changes within the consumer price index in selected transition economies, 1990-1997	118
3.4.3 Producer prices in industry in the transition economies, 1997-1998	120
3.4.4 Wages and unit labour costs in industry in the transition economies, 1997-1998	121
3.5.1 Total employment in transition economies, 1995-1998	127
3.5.2 Registered unemployment in the transition economies, 1997-1998	129
3.5.3 Growth rates of labour force and employment in selected transition economies, by sex, 1985-1997	136
3.5.4 Gender specific labour market indicators in selected transition economies, 1985 and 1997	137
3.5.5 Share of women in labour market indicators in selected transition economies, 1985 and 1997	138
3.5.6 Share of women in total employment by industry in selected transition economies, 1992-1997	141
3.6.1 Trade performance and external balances in the east European and Baltic countries, 1998	144
3.6.2 Foreign trade of the ECE transition economies by direction, 1996-1998	145
3.6.3 Trade balances of the ECE transition economies, 1993-1998	146
3.6.4 Changes in the volume of foreign trade in selected transition economies, 1995-1998	147
3.6.5 Effect of Russia’s August 1998 market collapse on export performance in selected east European and Baltic countries	149
3.6.6 CIS countries’ total trade, 1996-1998	153
3.6.7 CIS countries’ trade with CIS and non-CIS, 1996-1998	155
3.6.8 Russian Federation’s merchandise trade, July-November 1998	156
3.6.9 Non-CIS trade of the Russian Federation by selected commodities, 1994-1998	157
3.6.10 CIS countries’ progress in acceding to the World Trade Organization	159
3.6.11 Status of World Trade Organization accession and major outstanding bilateral issues, as of 30 September 1998	161
3.7.1 Current account balances of eastern Europe, the Baltic countries and European members of the CIS, 1996-1998	163
3.7.2 Foreign trade in goods and non-factor services of eastern Europe, the Baltic countries and European members of the CIS,
1996-1998	164
3.7.3 International credit ratings of eastern Europe, the Baltic countries and the CIS	169
3.7.4 Indicators of foreign direct investment in east European, Baltic and European CIS countries, 1997-1998	170
3.7.5 Net capital flows into eastern Europe, the Baltic countries and the European members of the CIS, 1995-1998	171
3.7.6 Net capital flows into eastern Europe, the Baltic countries and the European members of the CIS, by type of capital,
1996-1998	172
3.7.7 Changes in real exchange rates and current account balances, by type of exchange rate regime, 1993-1998	175
3.7.8 Selected external financial indicators for eastern Europe, the Baltic countries and European members of the CIS, 1997-1998	177
A.1 Real GDP in the ECE market economies, 1984-1998	196
A.2 Real private consumption expenditure in the ECE market economies, 1984-1998	197
A.3 Real general government consumption expenditure in the ECE market economies, 1984-1998	198
A.4 Real gross domestic fixed capital formation in the ECE market economies, 1984-1998	199
A.5 Real total domestic demand in the ECE market economies, 1984-1998	200
A.6 Real exports of goods and services in the ECE market economies, 1984-1998	201
A.7 Real imports of goods and services in the ECE market economies, 1984-1998	202
A.8 Industrial output in the ECE market economies, 1984-1998	203
A.9 Total employment in the ECE market economies, 1984-1998	204
A.10 Standardized unemployment rates in the ECE market economies, 1984-1998	205
A.11 Consumer prices in the ECE market economies, 1984-1998	206
B.1 Real GDP/NMP in the ECE transition economies, 1980, 1985-1998	207
B.2 Real total consumption expenditure in the ECE transition economies, 1980, 1985-1998	208
B.3 Real gross fixed capital formation in the ECE transition economies, 1980, 1985-1998	208
B.4 Real gross industrial output in the ECE transition economies, 1980, 1985-1998	209
B.5 Total employment in the ECE transition economies, 1980, 1985-1998	210
B.6 Registered unemployment in the ECE transition economies, 1990, 1994-1998	211
B.7 Consumer prices in the ECE transition economies, 1989-1998	212
B.8 Producer price indices in the ECE transition economies, 1989-1998	213
B.9 Nominal gross wages in industry in the ECE transition economies, 1990-1998	214
B.10 Merchandise exports of the ECE transition economies, 1980, 1986-1998	215
B.11 Merchandise imports of the ECE transition economies, 1980, 1986-1998	216
B.12 Balance of merchandise trade of the ECE transition economies, 1980, 1986-1998	217
B.13 Merchandise trade of the ECE transition economies by direction, 1980, 1986-1998	218
B.14 Exchange rates of the ECE transition economies, 1980, 1986-1998	219
B.15 Current account balances of the ECE transition economies, 1990-1998	220
B.16 Inflows of foreign direct investment in selected ECE transition economies, 1990-1998	221
LIST OF CHARTS
Chart	Page
2.1.1 Changes in world output, 1990-1999	14
2.1.2 Changing forecasts of world output growth, 1998-2000	14
2.1.3 Changes in international energy and non-energy commodity prices, 1970-1998	15
2.1.4 International share prices, January 1994-February 1999	16
2.1.5 The exchange rate of the yen against the dollar, January 1994-February 1999	18
2.2.1 Quarterly changes in real GDP, 1995-1998	20
2.2.2 Business cycle indicators for the European Union and the United States, January 1994-February 1999	22
2.2.3 Manufacturing output and capacity utilization in the euro area and the United States, January 1996-January 1999	23
2.2.4 Quarterly changes in real GDP and major demand components in western Europe, 1995-1998	24
2.2.5 Changes in total employment in industrialized countries, 1990-1998 .	27
2.2.6 Unemployment rates in industrialized countries, 1990-1998	28
2.2.7 Inflation in four major European countries, 1994-1998	28
2.2.8 Inflation rate differentials in the euro area, 1996-1998	29
2.2.9 Quarterly changes in real GDP and major demand components in the United States, 1995-1998	30
2.2.10 Inflation in the United States, 1994-1998	31
2.2.11 Nominal interest rates, January 1997-March 1999	33
2.2.12 Euro reference rates, January 1999-March 1999	34
3.2.1 Nominal and real lending rates in selected transition economies, 1996-1998	69
3.2.2 Remonetization vs. demonetization in Romania, 1994-1998	75
3.3.1 Gross industrial output in selected transition economies, 1995-1998	84
3.3.2 Volume of retail sales in selected transition economies, 1996-1998	91
3.4.1 Consumer price of food, non-food goods and services in selected transition economies, 1995-1998	116
3.4.2 Average annual rate of change in GDP and consumer prices in selected transition economies, 1993-1998	119
3.4.3 Real product wages and unit labour costs in selected transition economies, 1993-1998	123
3.4.4 Average annual rate of change in industrial production and real unit labour costs in selected transition economies, 1995-1998	125
3.5.1 Registered unemployment rates in selected transition economies, 1993-1998	130
3.5.2 Registered and labour force survey unemployment rates in selected transition economies, 1998-QII	134
3.5.3 Relationship between registered and survey-based unemployment rates in selected transition economies, 1998-QII	134
3.5.4 Unemployment rate, share of women, youth and long-term unemployed in total unemployment in selected transition economies, 1998-QIII	135
3.5.5 Relative total and gender specific employment growth index by sectors in selected transition countries, 1992-1997	139
3.6.1 Specific western demand for selected transition economies’ exports, 1994-1999	143
3.6.2 Quarterly changes in east European and Baltic exports and imports, 1997-1998	148
3.6.3 Changes in east European and Baltic exports by commodity, 1993-1998	150
3.7.1 Real exchange rates based on unit labour costs for selected transition economies, 1994-1998	166
3.7.2 Premia on selected transition economy bonds, September 1997-February 1999	168
3.7.3 Net capital inflows into eastern Europe and the Baltic states, by type of capital, 1997-1998	173
4.2.1 Shifts in total fertility rate, 1982-1996	183
4.2.2 Total fertility rate, 1980 and 1996	184
4.2.3 Trends in total fertility rate in selected transition economies, 1982-1996	185
4.3.1 Shifts in mean age of childbearing, 1982-1995	186
4.4.1 Shifts in proportion of non-marital births, 1982-1996	187
4.5.1 Changes in the number of monthly births and 11-month moving averages in the former German Democratic amd R Republic and Romania, 1982-1996	189
4.5.2 Relationship between total fertility rate and net material product/gross domestic product, 1985-1997	190
4.5.3 Relationship between mean age of childbearing and the proportion of non-marital births in selected market economies, 1965-1996	191
4.5.4 Relationship between mean age of childbearing and the proportion of non-marital births in selected transition economies, 1965-1995	192
LIST OF BOXES
Box	Page
2.3.1 Exchange rate target zones for major currencies	45
3.5.1 Goskomstat revision of Russian unemployment	132