Overview of Macroeconomic Developments

Abstract

This chapter reviews the achievements of SEE countries during the past quarter century. The period is analysed in terms of three distinct phases — the first (and sometimes painful) one of dismantlement and rebuilding, the second being the reward of the promised prosperity and a boom that got out of control, and the third is the economic hangover following the global financial crisis and the (continuing) problems in the euro area. It shows that the region needs to rebalance its output and production toward a greater reliance on foreign demand, and on domestic sources of savings to finance investment. The persistently high rate of unemployment in SEE has also put the spotlight on the region’s slow progress on structural reform.