Shrinking workforce, weak productivity to hamper CESEE long-term growth - IMF

May 11 (SeeNews) - The long-term economic growth of the region of Central, Eastern and Southeastern Europe (CESEE) could be obstructed by dwindling workforce and weak productivity, the International Monetary Fund (IMF) said on Thursday.

"Most of the region’s workforce is shrinking due to aging but also due to outward migration. Over time, the growing number of pensioners and the dwindling workforce would lower growth and widen budget deficits," the IMF said in its semi-annual Country Focus report.

However, the region's economy is forecast to grow by 2.2% in 2017 and by 2.4% in 2018, accelerating from 1.5% in 2016.

"Despite the humming of economic activity in the region, convergence between the West and CESEE nonetheless is likely to take longer than previously thought. That is because the longer-term potential growth in most of the countries in CESEE is still significantly lower than it was prior to the global financial crisis," the IMF noted.

To accelerate income convergence toward advanced European levels, CESEE countries must increase their productivity and investment. The IMF also urges those countries to work towards strengthening institutions, improving the efficiency of the public sector and increasing labour participation.

Details about economic growth by region (in pct) follows:

Source:IMF

SEE countries include EU member states Croatia, Romania and Bulgaria and non-EU Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia. CEE countries include Slovenia, the Slovak Republic, Poland, Hungary and the Czech Republic.