Double-dip recession over, yet no boom in sight

The protracted recession in the euro area will continue to be a drag on the economic growth of most CESEE countries in 2013. By and large, those countries are small open economies held hostage to the excessive fiscal austerity pursued in the euro area and the sluggish progress on the part of its policy-makers in adequately addressing the structural roots of the crisis. At the same time, the private sector demand in the CESEE countries is unlikely to recover substantially in the near term either. Wherever there will be an increase in investments, it will be primarily funded via public money, with EU transfers playing an increasingly important role. In general, the prospects for 2013 are only marginally better than the previous year; any significant improvement will be unlikely before 2014 - in line with the projected recovery in the euro area. These are the main results of the newly released medium-term growth forecast for the region by the Vienna Institute for International Economic Studies (wiiw).