CESEE region faces slow growth and wage race to the bottom.
The growth in the CESEE region is expected to be slow, similar to the euro area. Income levels in these countries won't catch up as quickly as previously thought. Growth from 2015-2017 will be similar to 2014, with new EU Member States growing slightly below 3%. Inflation, deficits, and borrowing issues are less of a concern now. Low domestic demand is holding back growth, leading to low inflation and high unemployment. Wages are being kept low to boost profits and competitiveness, but this slows down consumer spending. Public investment is helping, but private investment is still weak. Companies are doing well financially but are hesitant to invest.