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Mario Draghi said joining the euro has improved the quality of institutions in eastern European members, as opposed to “more mixed” results in countries that have kept their own currencies.
The European Central Bank President, hosting a conference on central and eastern Europe in Frankfurt, told his audience that the main challenge in the region is achieving more balanced growth. That “will only be possible if domestic institutions and governance are improved,” he said.
“Those countries that joined the euro area have continued improving their institutional quality, partly owing to the accession process. In the other EU countries of the region, efforts to improve institutional quality have been more mixed in recent years.”
Enthusiasm for joining the 19-nation euro area has waned in the region, with some ex-communist countries including Poland and Hungary taking a more populist turn in recent years. This has fueled concern they may be backsliding on democratic norms some three decades after ditching communism.
Per capita gross domestic product among new European Union members has already reached 70% of the region's average, he said, adding that countries that also adopted the euro “have grown even faster, reaching almost 80% of the EU average.”
Draghi also said that central and eastern Europe has become disproportionately vulnerable to international shocks such as tariffs on cars, which total nearly 30% of manufactured exports.
To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Craig Stirling, Fergal O'Brien
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