6th Annual NBP Conference on the Future of the European Economy
Central Europe’s Growth Perspectives in a “New Normal" World
Warsaw, 14 October 2016
The operation of enterprises in Central Europe under the so-called global value chains, methods to stimulate innovation, the challenges resulting from the low inflation environment – these were some of the issues addressed by the 6th annual “NBP Conference on the Future of the European Economy”, held in Warsaw on 14 October 2016.
It was the sixth time that Warsaw has hosted economists from all over the world, including representatives of central banks, international financial institutions and academia. The central theme of this year’s event was “Central Europe’s Growth Perspectives in the ‘New Normal’ World.” The speakers offered a comprehensive review of this theme, warranting an answer to the question whether Central Europe is facing the risk of perpetuating its “second-class” economic status, and what measures should be taken by governments in the region to overcome the constraints on growth arising from the “new normal” state of the global economy, characterised by weaker economic growth and declining productivity growth.
The conference was opened by Professor Adam Glapiński, President of NBP. Mr Andrzej Duda, President of the Republic of Poland, addressed the conference participants and organisers via a special letter. Special contributions were delivered by Mr Mateusz Morawiecki, Deputy Prime Minister, Minister for Development and Finance, and Mr Werner Hoyer, President of the European Investment Bank.
The Conference consisted of four discussion panels. The discussion during Session I Banking sector and capital flows, in which representatives of Banca Națională a României, Deutsche Bundesbank, the European Commission, the European Investment Bank and the International Monetary Fund took part, focused on the reasons why, paradoxically, the processes that are supposed to strengthen the condition of the banking sector are not revitalising the economy, and also identified what could be done to remedy this.
Representatives of the European Central Bank, Katholieke Universiteit Leuven, Oesterreichische Nationalbank and The Vienna Institute for International Economic Studies (wiiw) participated in Session II Real economy: global value added chains and innovativeness, which was devoted to various aspects of the functioning of Central European enterprises in the so-called global value chains, including the policies and measures needed to kick-start innovation necessary to boost the competitiveness of Central European economies in comparison to other regions.
During Session III Central banks: unable to counteract lowflation? the focal point of the debate of the speakers, which included former and current representatives of the Bank of England, Bank of Japan, Magyar Nemzeti Bank and Narodowy Bank Polski, was the phenomenon of low inflation (lowflation) observed in Central Europe. The speakers analysed its reasons and assessed the usefulness of monetary policy tools applied in the advanced economies for the countries of Central Europe.
Speakers representing Columbia University, the European Bank for Reconstruction and Development, Narodna banka na Republika Makedonija and the World Bank participated in the last session – the “Crystal Ball” Panel, which like the previous editions of the conference, was an attempt to identify the major economic challenges faced by the region, which is characterized by relatively robust economic growth as compared to other EU countries, but also slow convergence, unfavourable demographic changes and the need for greater reliance on domestic savings.
During the discussions it was emphasised that the phenomena of lowflation and low interest rates were of a local, rather than global, nature. The speakers agreed that in the present conditions the traditional monetary policy measures could still be efficient. It was argued that an extra stimulus for growth in the region could be provided by further liberalisation of the services market and the removal of the remaining barriers in the EU services market. Furthermore, the discussants pointed out that the effects of globalisation that are beneficial for society should be distributed more evenly among its citizens.