Finance Forum: The economic development of the EU in turbulent times

On 19 September, another Finance Forum event series entitled "The economic development of the EU in turbulent times" took place in the Purpursaal of the Federal Ministry of Finance (BMF). Once again, the event was organised in cooperation with the World Bank, which presented the most important findings of its current EU Regular Economic Report. This annual report provides in-depth analysis of recent and future economic developments in the EU. This time, as a special topic, reform proposals for four selected EU member states (Croatia, Bulgaria, Romania and Poland) were presented and their effects examined.

After the participants were welcomed by Harald Waiglein, Head of the Section for Economic Policy, Financial Markets and Customs at the Federal Ministry of Finance, and Xiaoqing Yu, World Bank Country Director for the Western Balkans, three World Bank experts (Jasmin Chakeri, Mona Prasad and Collette Wheeler) presented the core statements of the report. They emphasised the great uncertainty in the face of multiple and sometimes interrelated crises, ranging from the war in Ukraine to high inflation and global supply chain disruptions caused by the COVID-19 pandemic. The strong inflationary trend in food and energy will put a much greater burden on particularly vulnerable groups. These should therefore be supported as specifically as possible in order to prevent a negative development of poverty and social tensions

In the subsequent panel discussion, moderated by Alfred Katterl, head of the department for general economic policy at the BMF, Stefan Bruckbauer, chief economist at UniCredit Bank Austria, and Richard Grieveson, deputy Director of the Vienna Institute for International Economic Comparisons (wiiw) highlighted the various economic risks for the EU. Bruckbauer predicted an incipient recession for the euro zone, although Austria could still expect slightly better growth data due to the particularly strong economic development before the war. According to Bruckbauer, Germany's industry has been in crisis for almost a year due to supply chain problems.

Richard Grieveson emphasised that this would also have serious consequences for many countries in Central and Eastern Europe, since they are economically closely intertwined with Germany. In addition, Grieveson sees the Western Balkans as particularly vulnerable due to closer ties with Russia and lack of access to EU funds. Regarding the implementation of structural reforms in the selected Eastern and Southeastern European member states, Mr. Bruckbauer was sceptical as the political situation in many countries in the region such as Romania and Bulgaria was very difficult. Both speakers saw some potential in the Next Generation EU reconstruction instrument, although the administrative capacities for implementing the funds were not sufficient in all countries.