• Top economist expects a more stable 2011

• Cheap labour should not remain the only advantage of the region

In order for a long-term competitive power to be created in the region of Central and Eastern Europe (CEE) the most important thing after the crisis is to create a comprehensive infrastructure from various elements, from efficient market environment to the eurofunds, to investing in infrastructural projects. This can give the economy a competitive impetus and make it attractive for foreign investments. It is important for the economy even to be able to choose the inflowing FDI and to channel them to the productive and export-oriented sectors. This is the recepe for achieving a long-term competitive power in the CEE region, said Debora Revoltela, Head of CEE strategic analyses of Unicredit during the annual conference of Euromoney in Vienna.

In her opinion, the pre-crisis boom in sectors like real estate has a big influence especially for certain economies in SEE. Although there is still stable demand for investments in real estate and it will continue, if a country wants to make its economy competitive, investments must be made in those sectors which can afterwards lead to export increase. ”I do not think that the region should rely only on cheap labour-based competitive power because that would be a short-term advantage only as China and India, etc. are also on the world market. A combination of qualitative labour force and quality of the overall market environment is needed, Revoltela said.

Clearly, said she, Central Europe exits the crisis first and the countries from the region develop well. In SEE we see certain delays in the recovery process. The year 2010 was mainly an year of restructuring, of retuning the economy, while 2011 will be the year of consolidation“, Revoltela added.

The role of reforms

Is very important that reforms in the SEE countries continue because this is one of the conditions for creating an efficient market environment. Another important thing is to use European funds. In some countries there are proposals for banks to be more actively involved in the project selection and to promote the use of such funds. “The eurofunds must enter the right sectors so that we have a growth engine.“, Revoltela thinks.

In her opinion, the CEE region as a whole remains Europe’s production arm as international companies now more than ever must be effective, and the most effective plants are in the SEE. This is a big advantage for the region.

For the SEE region Revoltela prognisticated that 2011 will be marked by stability after the difficult 2010. It is of key importance for achieving stability that a balance is struck between a fiscal control and boosing the economy through investment in specific sectors.

The right investments in the right sectors will create the basis for the long-term growth which should not be ousted by short-term or populist policies.