Recent Macroeconomic Developments in the New Member States

Recent monetary and fiscal policy measures in response to the macroeconomic developments in the New Member States, in the context of the international financial and economic crisis during the years 2008 and 2009 which prolonged further in 2010 were characterized by heterogeneity and asymmetries. The macroeconomic imbalances characterizing the recent evolution of these economies are different from country to country as a result of diverse factors such as the excess demand magnitude at the onset of the crisis, the importance and structure of the commercial flows, the external financial indebtedness or the different contribution of the economic sectors to the economic growth. Also, the monetary and fiscal measures implemented before and after the onset of the crisis are important. In particular, in the countries with a fixed exchange rate, monetary and fiscal policy measures have been limited by the additional constraint of maintaining the confidence in the domestic currency. In countries such as Hungary and Romania which have an inflation targeting regime, the interest rate reductions have also been limited by the liquidity problems on the interbank market as well as by a high level of the inflation rate that existed in these economies at the onset of the crisis.