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Macroeconomics  |  October 07, 2012 10:17:13

The result of the pension reform is uncertain, the Czech Republic without it but can not do

Czech austerity investors welcome, but it lacks economic growth, or measures that led to it. Without that may in the medium term problems, says in an interview London Bank of America economist Mai Doan. From the Czech economy in the medium term is expected to grow 1 to 1.5%.

Let's focus on the medium term. What is the state of the economy in Central and Eastern Europe will be and what role do you expect to be in the European and global economy play?

Mai Doan (MD): In this term will propel the region of convergence, the final stop of the euro area. On the other hand, the growth potential of the CEE total crisis suffered. Therefore, in the eyes of global investors, compared with other regions of the world yours slightly lost. Yet CEE countries will continue to be a key partner of Western European countries. You will be in Central and Eastern Europe continue to invest and will continue to do business with her, that's for sure.

Do you expect that they will be central and eastern Europe in the wake of the crisis closer to each other, or the differences between them due to the current economic turbulence increases?

MD: It is now difficult to estimate. Politics is playing - and, if CEE economies will continue to play - a huge role. Fourth year of the crisis we are experiencing, living standards and growth yet failed to get to the level that people expected. This is from the perspective of policy problem. Sure, every country is unique, but even so I would say that it is now in the eastern part of Europe's commitment to reform was smaller. It is four years after the crisis weakened and will tighten their belts.

It is currently a recipe that you would-imposed to all countries in the region?

MD: I think there is a similar recipe. Central and Eastern Europe is what macroeconomic fundamentals and political approach to the problems involved, very diverse. Some countries would advise a mix of pro-growth and austerity measures. For others it was mainly of savings. The situation is complicated but everywhere, even in Western Europe, which are unable to find an effective medicine for the periphery of the eurozone. However, if you want to grow, not just focus on saving probably the best solution. At least so far it seems.

Let's look specifically at Czech Republic. What should be done to avoid potential problems in the medium term? What is the most important sense?

MD: I think we all agree that it is a reform of pensions. If the reforms will not continue in this chapter deficit will grow. On the other hand, there is now room for some deceleration in 2013. In the medium term, but that the Czech government will have to do.

What do you think of the well-known form of the pension reform, which was recently vetoed by President Klaus?

MD: The outcome is quite uncertain. Much does depend on what people will do-savers. The point is to educate people and convince them to participate in the second pillar. Therefore, I do not think that everything will go hard from day one, when the reform takes effect. What is certain is that the government stepped right direction. On the other hand, did only the first of a series of necessary steps.

What could start by Mai Doanové Czech economy can be found on the web Investment

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