Posted on 02/03/2005 2:49:19 PM PST by Lukasz
Powered by a winning combination of cheap labor, low taxes and increasing investor confidence, the economies of central European countries like Poland, Slovakia, the Czech Republic and Hungary grew more than twice as fast as those of their richer neighbors in the West last year.
The latest figures from Eurostat, the European Union's statistics office, show average economic growth of 4.4 percent during the first nine months of 2004 for four of the countries that joined the EU last year.
Slovakia led the region with growth of 5.3 percent, followed by Poland's 4.8 percent. Hungary at 3.7 percent and the Czech Republic with 3.6 percent rounded out the quartet, according to the Eurostat report, released last week.
"Current growth rates, which are on the higher end of expectations, look sustainable in the long run and there's no indication that these economies would be overheating or out of balance," said Zsolt Papp, senior economist at ABN Amro in London.
Meanwhile, "old" EU members like Germany and France recorded GDP growth of 1.3 percent and 1.9 percent respectively.
Poland's outlook seems the most encouraging for this year, while Hungary and the Czech Republic are more exposed to export demand from old EU members, like Germany, Papp said.
EU accession and joining the single market had a significant effect on the economic performance of EU newcomers from central Europe.
Exports were boosted by the abolishment of customs formalities, tourism figures soared as budget airlines reached these formerly untapped markets, and foreign investments recovered significantly, fueled by increased investor confidence.
A study by accounting firm Ernst & Young showed that foreign investment in Europe rose 27 percent in the first six months of 2004, reflecting 1,432 new projects compared to 1,126 in the first half of 2003. There were no separate figures for eastern Europe.
Besides mentioning the new EU countries from central Europe, the report also highlighted Russia as a magnet for foreign direct investment in 2004.
Ernst & Young noted that the new EU members were preferred to their Western neighbors as investment targets. Hungary won more projects than Germany; the Czech Republic and Poland both fared better than Spain; and Slovakia outpaced Austria.
"2004 was a very good year for foreign investment in central Europe," Papp said. "With EU funding flowing in more regularly this year, I expect FDI levels to remain stable in 2005," he added.
The inviting tax environment in central Europe has rattled nerves in the euro zone, most notably in Germany and France - the EU's two largest economies.
Decisions by several companies to relocate and outsource production have led to heated national debate in the EU powerhouses on the steady loss of jobs to Eastern Europe, as well as to Asia and Africa.
While cheap labor is the primary reason for relocation - manufacturing wages in Germany are some six times higher than in central Europe - the business-friendly tax systems come a close second.
German and French corporate taxes, at 38.3 percent and 34.3 percent respectively, have a sobering effect on potential investors and drive away existing ones.
At 16 percent, Hungary boasts the lowest corporate tax rate among the four countries, followed by Poland at 19 percent. Slovakia's flat tax rate of 19 percent - for corporate, income and value-added taxes - has proved a highly efficient tool in luring foreign investment, turning the nation into a car manufacturing hub. The rate in the Czech Republic is 28 percent.
Over the past two years, PSA Peugeot Citroen and Kia Motors Corp. have started building plants in Slovakia set to produce 500,000 cars annually beginning in 2006. U.S. automaker Ford Motor Co. and Germany's Getrag Group announced plans in December to build a euro300 million (US$399 million) transmission plant in eastern Slovakia.
"Foreign investment inflow is driven by EU membership and the high quality of human capital, and these factors will continue remain supportive in the medium term," said Jens Nystedt, senior economist at Deutsche Bank's Global Market Research.
The future also looks rosy for these countries, as foreign investment is expected to increase throughout the region in 2005, according to Nystedt.
Paris and Berlin have openly criticized taxation practices in central Europe and increased pressure on new member states to raise their corporate tax levels or risk losing EU subsidies.
Central European countries do not seem intimidated by pressure from the West and are planning further cuts.
New Europe showing up Old Europe!
Don't worry, EU rules, regulations and edicts will cure them of that problem soon enough.
Old Europe don’t have enough power to force all new states to do something with they don’t like.
In other news: German unemployment rate hits 11.4% - highest level since WWII.
At 16 percent, Hungary boasts the lowest corporate tax rate among the four countries, followed by Poland at 19 percent. Slovakia's flat tax rate of 19 percent - for corporate, income and value-added taxes - has proved a highly efficient tool in luring foreign investment, turning the nation into a car manufacturing hub.
It is the secular socialist countries. France and Germany, that the Democrat Party most admires. It's what the sick scumbags want for America. They are well aware of all the data (like the above) which demonstrates clearly that socialism does not work. They DO understand that it's a loser - - for everybody but THEM.
For Democrat politicians, economic misery is the ticket to POWER. The more economic misery there is out there, the better it is for welfare-promising, big-government Democrats. (Of course, the Democrats also privately wring their hands in glee every time soldiers get killed in Iraq because that is also helpful to them. Democrats are some very, very sick pups.)
German unemployment rate hits 11.4% Highest level since WWII.ha! I had no idea! Thanks.
While the U.S. checks in today with 5.2% unemployment, or 94.8% EMPLOYMENT.
Does that 11.4% figure include only German citizens, or everyone living in Germany?
Does that 11.4% figure include only German citizens, or everyone living in Germany?
There are a couple of ways to invest in these countries and profit from their success.
The mutual fund EUROX invests in these countries, and the exchange traded fund EWO invests in Austria. Austria is the major trading center for these so called emerging countries.
The link below shows the past two year performance for EWO and EUROX. The increase is exactly chump change.
http://finance.yahoo.com/q/bc?t=2y&s=EWO&l=on&z=m&q=l&c=eurox
Huh? What'd you say?? Didn't you mean "isn't," instead of is??? Does this revolve around Clinton's definition of "is," er what???
Them grafs looked purdy gud ta me!!! If you think that's exactly "chump change," then will ya give it ta me, rather than sneer at it??? Givitame! Right NOW!!! (snark!)
I meant to say isn't.
Define isn't! :)
Just like Jimmy Carter & Bill Clinton... It's an "is" with a contracted knot at the end of it!!!
Now... If he'da said: "I did not engage in a reproductive act with that woman, Monica Lewinsky," He'da been tellin the danged truth! But he din't, so he lied, then like an old tom cat tryin ta cover his stinky/kinky tracks... well you know the rest and the rest is hisstory, not hersstory!!!
But he sure kneaded impeachin, an he sure kneaded removin, but I guess one outta two ain'ta total loss... I just don't understand Dubya tryin so hard to restore the bastard's respectability!!!
You don't EVER wanna turn the other cheek to that sexual predator if'n ya knows what's good for ya!!! Remember about that contracted knot at the end of his "is!"
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