Convergence to the Centre

Abstract

This chapter focuses on the main macroeconomic developments in the Emerging European Economies (EEE) group leading up to and during the Covid-19 pandemic, and also on the longer-term outlook after the crisis. The emphasis is on economic convergence and crisis resilience, with a comparison of economic and social indicators during the current pandemic and the previous large economic shock, the global financial crisis of 2008-2012. The goal here is to set the stage for the more detailed analyses of subsequent chapters, and provide a context in which those details can be interpreted. Our main message is that while the EEE overall have exhibited significant convergence to the more advanced European Union (EU) member states, gaps remain, especially when we look at various social indicators. Crisis resilience also improved after the global financial crisis, so there is hope that the EEE will emerge faster and stronger from the current crisis than it did from the previous one. To complete the convergence process, to reap the benefits of a potential relocation of global value chains to Europe, and to avoid persistent negative consequences of the economic shocks, it is important to boost productivity, increase innovation, and invest in human capital.