Ireland and the dynamic Asian economies grew 9-10 per cent a year during their most intense catch-up phase. But the largest of the new member states - Poland, Hungary and the Czech Republic - are only growing a few percentage points faster than the average for the old countries; an average that furthermore is being pulled down by the poor performances of Germany, France and Italy. From this we can come to at least two conclusions: Firstly, Poland, Hungary and the Czech Republic, which already have fairly substantial public expenditures for their income level, should take care not to end up in the same situation as Germany, France and Italy, with high expenditures, large deficits and considerable needs for reform. Secondly, both new and old countries need a broader injection from the enlargement for their economic performance. Mobility for goods has been one of the key factors behind the new member states' growth. When the process towards EU entry was initiated in the mid-1990s, the majority of the EU’s barriers to trade for the future member states were abandoned through the Europe agreements. This resulted in one of the most dramatic and least publicised changes in trade in modern time - far more significant for most EU countries than, for instance, trade with China today.
The long term: mobility and prosperity Although much of the debate necessarily focuses on the short term, the key issues are those that concern the long run. On the one hand, how can the new member states catch up sustainably on the EU average in terms of prosperity and productivity? On the other hand, how can the “old” EU countries benefit from the enlarged EU in order to boost growth, which in many cases has left much to be desired? 2  BIS Review 51/2004  Firstly, let me point out where we stand today. According to the EU’s statistical agency, Eurostat, the purchasing power adjusted GDP per capita of the eight new eastern and central European member states ranges from 77.3 per cent of the EU average in Slovenia to 42.6 per cent in Latvia. The richer new member states - Slovenia, the Czech Republic and Hungary - are in terms of purchasing power closer to the EU average than Spain and Portugal were when they joined in 1986 (Slovenia is actually on a par with Portugal and Greece today). The other countries are all just under the relative level that Portugal had in 1986. Sometimes the GDP curves are extended up to the beginning of the 1990s and the fall in output that followed the liberation from communism. These figures are in many ways misleading, however. Firstly, there was considerable manipulation of statistics under the dictatorship, making correct data difficult to reconstruct.