Recent Developments in the CMEA Economies and Yugoslavia

Economic growth in the whole area accelerated to a rate of 3.9 percent in 1988, the performance of individual countries differing widely, however. Cyclical strength in the West stimulated East-West trade; this, along with clement weather conditions and exchange rate effects, contributed towards a recovery of exports to the West and a reduction in foreign indebtedness of most Eastern countries. Yet, technology in manufacturing kept lagging behind with production exhibiting a high input component of basic material and energy, and the grain harvest in the USSR was poor. Attempts at restraining domestic demand through inflation-induced cuts in household incomes proved successful only in a few countries. Prospects for East-West trade in 1989 are favourable due to the continued buoyancy of Western economies. However, the internal difficulties in most CMEA countries leave little scope for growth gaining further momentum.