European Neighbourhood Policy: Economic Review of EU Neighbour Countries

This is the third issue of the Economic Review of EU Neighbour Countries. The European neighbourhood runs from Morocco in North Africa, through the Middle East, to Russia – including those countries that directly border, or closely border the European Union, and whose growth and welfare is of particular importance to Europe for economic and political reasons. This year the review includes a special focus on a topical issue: the macroeconomic effects of energy price shocks in resource poor CIS countries (written in collaboration with the EBRD). After several years of below market prices for its gas exports to the CIS, Russia has decided to review these arrangements and to significantly increase prices, bringing them closer to the levels applied to the EU. Starting in early 2006 with Ukraine, the renegotiation of gas prices has since then affected also Armenia, Belarus, Georgia and Moldova. This chapter compares the macroeconomic effects of the energy-price shock on growth, macroeconomic stability, budget and balance of payments in these energy-importing countries.

In addition to country-specific chapters, this review includes also two overviews of the recent economic developments in the Mediterranean and the EU Eastern neighbourhood regions. These chapters are structured along the main areas of reform: macroeconomic developments, trade liberalisation and economic opening, business climate, public institutions and public finance management, and social development and poverty.