Enterprise –East

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Enterprise-East is a service of EuropaSurvey® based on selected open-source materials. The website is not responsible for economic statistics or financial projections appearing in the Forum, which are derived from published newspapers, newsletters, and corporate press releases. Quotes, where indicated, provide the original date and source of the publication.

Economic News and Views from the EU-East and Eastern Europe— October 1, 2007

Media reports indicate that despite a modest slowdown in the growth rate of the Polish economy, domestic demand remains strong as does the health of Polish enterprises. However, skills’ shortages due to out-migration continues to present a challenge both to the development of an adequate labor force and a rise in labor costs.

In Poland itself, PMR publications surveyed the Russian construction market and found that it was not only expanding, but was also accompanied by a significant average annual growth rate (20%). Imports of engineering vehicles and other machinery are increasingly replacing aging equipment and are expected to continue through 2009 according to the new report entitled "Construction Machinery Market in Russia 2007: Development Forecasts 2007-2009." The report is designed to aid investment decisions in the eastern European market.

Though government changes occupied most newscasters, attention also turned to the fact that the current administration in Poland will raise the minimum wage by a quarter in 2008. Convergence with EU criteria is also improving with the 2007 public finance deficit reaching 3.4% of GDP. Maastricht criteria anticipate a figure of 3.0 percent.

Romanian surveys have concluded that for the first time in many years, the country’s trade imbalances have shifted from Russia to Germany, the EU’s predominant exporting nation. Imports from Germany are reported to be growing if not "massive" according to Romania’s major news outlets.

In Romania, Ford Motors is investing in Automobile Craiova with a purchase of over 74% of the company’s stock. Negotiations were guided by the Romanian commission responsible for privatization.

Romania recently made significant advances in its goal of increased energy independence. The state-owned KazMunaiGaz, an energy group in Kazakhstan, purchased 75% of the Romania oil firm Rompetrol. Chief executive officer of Rompetrol described the agreement as one that offers Europe "an energy bridge that does not depend on Russia." The EU is trying to develop a common energy strategy in light of Russia’s cut off of gas supplies through the Ukraine in January, 2006 during attempts to raise gas prices to market levels. Currently, however, the focus of the European Commission remains largely on internal market considerations, including the decoupling of production and distribution networks. The European Commission has also proposed denying state-owned and private companies with bases outside of the EU access to the purchase of EU members’ strategic energy assets.