Washington, DC: A high-level conference to discuss key challenges and policy options for the Central, Eastern, and Southeastern Economies (CESEE) region, entitled "Policymaking in Choppy Waters: Fostering Resilience in Central Eastern and Southeastern Europe (CESEE)," was jointly organized by the International Monetary Fund (IMF) and the Croatian National Bank (CNB) on June 2-3 in Dubrovnik, Croatia.
The event gathered over 100 participants including representatives of the government of the Republic of Croatia, central bank governors and ministers of finance from the CESEE region, representatives of the European Commission, the European Investment Bank, the European Bank for Reconstruction and Development as well as renowned economic experts.
One of the most difficult challenges facing the region is energy security. Russia's war against Ukraine has curtailed gas supply and dramatically increased energy prices. Conference participants agreed that the green transition needs to speed up to enhance the region's energy security and reduce scars from the energy crisis. That means ambitious greenhouse emission targets, and a central role for carbon pricing in achieving them.
Recent shocks and rising geo-economic fragmentation test the resilience of cross-border supply chains. Participants emphasized that CESEE countries could seize opportunities in a more fragmented world by remaining open to attract new investment and trade flows, and by pursuing other policies that make them attractive places to do business-stronger governance, better education, and enhanced infrastructure.
Finally, the discussion also focused on how to defeat stubbornly high inflation triggered by the pandemic and amplified by the energy crisis, while sustaining the economic recovery. Monetary, fiscal and structural policies would need to work in concert. That means tight monetary policy, ambitious fiscal consolidation, as well as growth-enhancing reforms, including to ease labor market tensions.
"COVID and Russia's war in Ukraine have left a legacy of high inflation and low growth in Central, Eastern and Southeastern European economies. Compared to our projections prior to COVID, the region has suffered a cumulative €50 billion income loss. With the right choices and the right execution, policymakers today can recoup that shortfall and leave a legacy as durable, as successful-and as beautiful-as Dubrovnik," said the IMF Managing Director Kristalina Georgieva in concluding her remarks.
The IMF would like to thank the authorities in Croatia for their gracious hospitality and excellent collaboration.
