Top of Europe?
Courtesy: The windsurfers from Continentseven,
Af Ole Aabenhus
Economic growth in the Baltics – the Northern part of the EU, comprising all the eight EU-countries around the Baltic Sea – is more or less stagnating. This is the conclusion of the annual “State of the Region” report presented Monday in Copenhagen by Baltic Development Forum. For many years the BDF proudly used the term “Top of Europe” about the Baltics. Now it got a different ring to it.
In his presentation of the report Helge Pedersen, senior economist, grouped the different countries as follows:
In good shape: Sweden, Germany, Poland, Denmark
In almost-good shape: Iceland (now back on track)
Survivors: The Baltic countries
Struggling: Norway (because of the drop in oil prices; as a Nordic countries, Norway and Iceland are often included in the term “Baltic”) and Finland.
Finland suffers because Russia is in a deep depression, he said, with a negative GDP growth of 4 per cent. Along with the sanctions politics between Russia and the EU, the depression has a marked influence on the entire region.
But this is not the only explanation. In the Baltics, like in the rest of Europe, business investments have still not started picking up after the 2008-10 crisis. This may be expected to go on for a while, Helge Pedersen said, because there is still over-capacity in many industries.
Apart from these factors the climate should be extremely favourable for business: Interest rates are extremely low and will stay low for a long time. The euro has depreciated against the dollar, making export products cheaper abroad. The danger lurching around the corner is that the low interest rates will spark off still another housing bubble, in part because industry will not compete for available capital.
Co-author of the BDF’s “State of the Region” report Christian Ketels noted that before the crisis, the Baltic Sea countries liked to call themselves the “Top of Europe”, boasting an average growth rate of 3,5 per cent. Today, after the crisis, it is around 1,6 per cent.
This is still good compared to EU28, Mr Ketels, said, but productivity growth has slackened, and export is “flattening” in the sense that market shares are generally not growing.
His conclusion: “No, there is no immediate threat, but our position is slowly eroding. And there is no clear directions on how we can move forward”.
Russia was the big challenge to the Baltic Sea countries in a discussion paper presented by two German researchers from the Stiftung Wissenschaft und Politik in Berlin, Tobias Etzold and Christian Opitz. They talk of “renewed militarization” in the region, and ask if, and how, Russia can be (re-)engaged in meaningful regional cooperation.
Earlier cooperation at government level – notably the CBSS (Council of Baltic Sea States) - has dried out. There has been no ministerial meetings since Spring last year. But, they say, regional stakeholders should do their best to maintain at least a minimum of regional cooperation with Russia, and low-key cooperation – at ministry official’s level – should be maintained “by any means” in fields like environment, infrastructure, trafficking, cross-border crime, people-to-people contact and “building a civic constituency for good neighbourhood relations”.