Life in Transition

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After the crisis

Life in Transition

Presented by: Erik Berglof, EBRD Chief Economist

Life in Transition

Slide title

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After the crisis

Life in Transition

Impact of the crisis

Life in Transition

-0.12

-0.10

-0.08

-0.06

-0.04

-0.02

0.00EBRD regionEU 15Latin AmericaEmerging Asia

Chan

ge in

GD

P gr

owth

, 200

7-09

GDP growth rate in transition countries dropped on average over 10% between 2007 and 2009

Crisis hit transition region more than western Europe, other emerging markets

Life in Transition

Strong perception Weak perception

The downturn was felt most strongly in south-eastern Europe

Life in Transition

0

10

20

30

40

50

60

70

80

Uzb

ekis

tan

Czec

h R

epub

licSl

ovak

Rep

ublic

Bel

arus

Kyrg

yz R

epPo

land

Wes

tern

Eur

ope

Rus

sia

Kaz

akhs

tan

Slov

enia

Ukr

aine

Turk

eyTr

ansi

tion

regi

onEs

toni

aM

oldo

vaLi

thua

nia

Geo

rgia

Azer

baija

nCr

oatia

Latv

iaFY

R M

aced

onia

Tajik

ista

nAl

bani

aM

onte

negr

oB

osni

a an

d H

erz.

Arm

enia

Rom

ania

Hun

gary

Serb

iaB

ulga

ria

% o

f res

pond

ents

Transition region households felt the crisis more than in the West

Life in Transition

0

10

20

30

40

50

Fam

ily m

embe

rs

abro

ad re

turn

ed

Hous

ehol

d m

embe

r

starte

d wo

rking

Fam

ily b

usin

ess c

lose

d

Had

to ta

ke a

seco

nd jo

b

Incr

ease

d wo

rk

hour

s in

exist

ing jo

b

Wor

king h

ours

redu

ced

Redu

ced

rem

ittan

ces

Wag

es d

elaye

d/su

spen

ded

Job

loss

es

Wag

es re

duce

d

■ CEB ■ SEE + Turkey ■ CIS + Mongolia ■ Average

% o

f res

pond

ents

Crisis affected households mostly through wage cuts and job losses

Life in Transition

0

20

40

60

80

100

Wes

tern

Eur

ope

Slov

enia

Bos

nia

and

Her

z.Sl

ovak

Rep

ublic

Mon

tene

gro

Pola

ndM

ongo

liaCz

ech

Rep

ublic

Croa

tiaEs

toni

aAl

bani

aB

elar

usU

zbek

ista

nR

ussi

aSe

rbia

Tran

sitio

n re

gion

Lith

uani

aR

oman

iaTu

rkey

Bul

garia

Ukr

aine

Mol

dova

Tajik

ista

nK

azak

hsta

nH

unga

ryKy

rgyz

Rep

ublic

FYR

Mac

edon

iaAz

erba

ijan

Latv

iaAr

men

iaG

eorg

ia

% o

f res

pond

ents

Well over half of affected households coped by saving on staple food or health care

Life in Transition

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Life in Transition

Life satisfaction

After the crisis

Life in Transition

2006 Low satisfaction High satisfaction

Despite the severe effect of the crisis, region’s life satisfaction remained stableLife satisfaction still well below the West

Life in Transition

2010 Low satisfaction High satisfaction

Despite the severe effect of the crisis, region’s life satisfaction remained stableLife satisfaction still well below the West

Life in Transition

2006 Low optimism High optimism

Optimism about future stayed well above Western levels

Life in Transition

2010 Low optimism High optimism

Optimism about future stayed well above Western levels

Life in Transition

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Life in Transition

Support for democracy and market economy

After the crisis

Life in Transition

Support for democracy fell in almost all EU members

Democracy favoured less than in western Europe…

2006 High support Low support

Life in Transition

Support for democracy fell in almost all EU members

Democracy favoured less than in western Europe…

2010 High support Low support

Life in Transition

Support for markets declined in almost all EU members

…whereas support for markets comparable to Western levels

2006 High support Low support

Life in Transition

Support for markets declined in almost all EU members

…whereas support for markets comparable to Western levels

2010 High support Low support

Life in Transition

■ Market economy ■ Planned economy ■ Doesn't matter

% of respondents

DemocracyAuthoritarian govt

Doesn't matter

0

10

15

5

20

25

30

35

“Democracy + markets” most favoured

Life in Transition

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Life in Transition

Corruption and trust

After the crisis

Life in Transition

…although trust in courts and police lags behind

Trust in institutions comparable to the West

0

10

20

30

40

50

60

70

80

Religio

us org

anisatio

ns

Trade u

nions

NGOs

Fore

ign in

vesto

rs

Banks and fin

ancial in

st.

Police

Armed

force

s

Politic

al parti

es

Courts

Parliam

ent

Loca

l gov

ernm

ent

Region

al gov

ernm

ent

Gover

nmen

t

Head of

stat

e

■ Western Europe ■ Transition countries

% o

f res

pond

ents

Life in Transition

Very significantly above the West and rising

Corruption remains a problem

■ 2006 ■ 2010

0

5

10

15

20

25

40

65

Western Europe

% o

f res

pond

ents

Esto

nia

Pola

ndLa

tvia

Geo

rgia

Slov

enia

Czec

h R

ep.

Mon

tene

gro

Lith

uani

aCr

oatia

FYR

Mac

edon

iaB

ulga

ria

Bel

arus

Serb

iaR

ussi

aB

osni

a an

d H

erz.

Hun

gary

Rom

ania

Slov

ak R

ep.

Mon

golia

Kaz

akhs

tan

Tran

sitio

n R

egio

nTu

rkey

Uzb

ekis

tan

Arm

enia

Ukr

aine

Tajik

ista

nAl

bani

aM

oldo

vaKy

rgyz

Rep

.Az

erba

ijan

Life in Transition

Corruption perception especially high in CIS

Road police, public health care seen as most corrupt

0

10

20

30

40

50

60

Other

socia

l sec

urity

Unemploy

men

t ben

efits

Public prim

ary/

seco

ndary ed

ucatio

n

Unoffic

ial doc

umen

ts

Public vo

catio

nal

educa

tion

Civil c

ourts

Public hea

lth ca

re

Road poli

ce

■ CEB ■ SEE + Turkey ■ CIS + Mongolia ■ Western Europe ■ Average

% o

f res

pond

ents

0

10

20

30

40

50

60

Life in Transition

Average trust in the region remains below the West

Generalised trust increased in the region

2006 High trust Low trust

Life in Transition

2010 High trust Low trust

Average trust in the region remains below the West

Generalised trust increased in the region

Life in Transition

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Life in Transition

LiTS2: A message of resilience

Life satisfaction decreased a mere two percentage points in the face of severe crisis

The combination of democracy and market economy remains most favoured

Trust in others showing a slight increase since 2006, but corruption endemic and rising

Optimism for future generations decreased, but still well above levels seen in the West