Has CEE exhausted its spare capacity?

Central and Eastern Europe suffered an unusually deep downturn during the global financial crisis, which led to a large rise in underutilised capital and labour. As demand strengthened, firms could then draw on these resources to raise output. However, the recovery is starting to look mature now and, as we explain in this Focus, the major economies in the region could plausibly exhaust their economic slack within the next 18-24 months.