A common challenge our emerging economies are facing is the need to speed up convergence towards the development level of mature economies. In order to achieve this, the responsible policymaker should be concerned with steady progress and not with delivering bouts of accelerated growth, which may turn out to be reversible. This brings us to the need to address bottlenecks to potential growth – even though in Central and Eastern Europe, for instance, growth is now much stronger than in the euro area, most countries have still work to do in order to ensure that potential growth matches the catching-up needs. At least in the non-euro EU members in Eastern Europe, bottlenecks to sustainable growth usually stem from structural impediments to labour supply (high emigration, low participation rate, decline in working age population, skill mismatch), inefficiencies in public administration, quality of institutions, in general, and in some cases, inadequate infrastructure. 1/3  BIS central bankers' speeches  While inflation has reemerged in Central, Eastern and South-Eastern European countries, in most cases it remains tepid (broadly, around 2 percent). Nevertheless, it has spiked in such cases as Romania and Turkey, where it currently stands at 5 percent and 11 percent respectively. Part of this reemergence is related to the global cycle, as it comes from international commodity prices, with idiosyncratic supply-side factors and domestic demand pressures accounting for the rest of the explanation.
At the same time, unemployment continued on a downward path and economic sentiment improved across the board. Some recent signals point to a slowdown, yet they seem to have more to do with temporary influences, growth prospects continuing to look strong. The past year recorded, on average, positive developments in EU candidate and potential candidate countries as well, in spite of GDP dynamics delivering a more mixed picture (from over 7 percent in Turkey to around 2 percent in Serbia and even stagnation in the Former Yugoslav Republic of Macedonia). Nevertheless, the outlook is positive, with recent forecasts pointing to relatively robust growth in the coming years. However, against this relatively rosy background, I should highlight that our economies, even those that belong to the Eurozone, have still much to do in order to become robust and offer good living standards to most of their citizens. Some members of this Club, Romania included, had to go through very painful adjustments during the past decade, as the global crisis found them trapped in a pro-cyclical policy stance and it remains to be seen to what extent they will manage to break free from this pattern in the current good times; some need to fight high inflation, pressures on their currencies or to correct their external imbalances. Nevertheless, the common denominator of all our economies is having to deal with institutional weaknesses and the need to undertake reforms that should make them stronger.