NID: EASTERN EUROPE: GROWTH STILL SLOW

• Document Type: SPECIALCOLLECTION
• Collection: The Collapse of Communism in Eastern Europe: A 30-Year Legacy
• Document Number (FOIA) /ESDN (CREST): 06826740
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 1
• Document Creation Date: November 26, 2019
• Document Release Date: December 10, 2019
• Publication Date: April 24, 1989

Approved for Release: 2019/10/29 C06826740
Special Analysis
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EASTERN
EUROPE:
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TCS 2794119
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Growth Still Slow
East European GNP grew about 1.6 percent in real terms last year and
probably will grow only slightly more this year. Major improvements in
economic performance would require ecanonsk,eIo_rnt and austerity
policies that would risk social instability.
Economic- growth in the region has improved front the 1987 rate
of 0.1 percent. Poland probably recorded the best GNI' growth at
2.1 percent: GNI' growth in Yugoslavia at 0.1 percent was the lowest.
Overall industrial production increased only marginally, and farm
output fell for the second year by about 1 percent. Most of the rowt1
came from other sectors�trade, transportation, and services.
The Yugoslav economy was whipsawed by drought, labor unrest. and
250-percent inflation. East Germany grew at the sante slow rate as in
1987. in large part the result of a sharp drop in agricultural output; in
Hungary growth was at a virtual standstill because of an austerity
program intended to slow the increase in foreign debt. Romanian
growth was probably above 1987 levels, but official statistics arc
increasingly scant: Polish growth also rose, but a poor harvest
somewhat offset industrial gains. Improved growth in Czechoslovakia
was because of increased agricultural output: Bulgarian growth was
probably led bvirrprovcments in the transport, trade, and housing
Sectors
Standards of living throughout the region have suffered. In Hungary
consumption apparently declined 3 percent as consumers were
squeezed by 16-percent inflation and new income taxes, while
Yugoslays fared even worse with raging inflation and 14-percent
unemployment. Romania's already abysmal living standards fell
further as a result of the drive to repay hard currency debt, and
shortages of consumer goods again plagued Poland and Bulgaria.
Even relatively affluent East Germany and Czechoslovakia admitted
increased shortages of some consumer goods and restrictc s
shoppers front neighboring East European countries
Most East European regimes hope reforms will improve economic
performance this year. but even the most reformist governments face
several years of painful adjustment. Hungary and Yugoslavia have
promised systemic changes in return for IMF assistance, while Poland
hopes to receive an IMF program by yearend. Bulgaria and
Czechodovakia will do little more than tinker with their centrally
planned systems; East Germany and Romania continue to cling to
strong central control. Growing consumer dissatisfaction will cause
some East European countrics to retreat from even modest reforms
and austerity programs. Most will bend to severe pressure to increase
consumer goods imports. Only Romania probably will continue to
ignore consumer demands.
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Approved for Release: 2019/10/29 C06826740