Economic growth should pick-up across Eastern Europe in 2004 as export demand rises and inflows of FDI remain strong. Of the four larger economies joining the EU in May this year – the Czech Republic, Hungary, Poland and Slovakia (the so-called Visegrad-4) – growth will be weakest in Hungary, depressed by high interest rates and poor external competitiveness. Of the prospective members of the EU – Bulgaria, Romania and Turkey – the Turkish outlook is the most uncertain. We expect Turkish growth to slow sharply in 2005, as a refusal by the EU in December this year to give a firm date for starting accession negotiations hits the lira and forces up interest rates.
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