Euro Area entry calls for more fiscal flexibility to absorb cyclical shocks that cannot be dealt with by the common monetary policy. At the same time fiscal consolidation must not be put at risk, especially given rising ageing related costs.
As in other catch-up countries inflation is likely to stay high going forward due to nominal convergence in Slovakia.
Despite the recent enlargement of the EU, Central Europe faces sluggish growth prospects, unless labour-market policies are made more job-friendly, as discussed in this working paper.
English, , 389kb
This working paper sets out lessons from emerging markets for EU assession countries.