The surge in labour costs across Central and Eastern Europe (CEE) in recent years has led to a sharp loss of competitiveness and raised concern about the impact on the region. We remain relatively optimistic on the medium-term outlook and still think that CEE economies should be able to maintain decent rates of GDP growth of 2.5-3.0% on average over the rest of this decade. The main impact of high labour cost growth is likely to be felt through a prolonged period of high inflation (particularly in Hungary, Romania and Bulgaria) as well as downward pressure on nominal exchange rates this decade.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services