Economic growth in the ten states joining the European Union next May will accelerate to an average 3.8 per cent next year and 4.2 per cent in 2005, from 3.1 per cent this year, the European Commission said today.
The Commission's Autumn Economic Forecasts cited an expected recovery in the 15 current EU states "and the prospect of enlargement" as the factors driving growth.
But six of the 10 will have budget deficits this year above three per cent of Gross Domestic Product - the level governments must achieve to qualify for membership of the euro. The average deficit of the acceding countries will be five per cent.
The deficit in Poland, by far the largest accession state, accounting for nearly 40 million of the 75 million who will become EU citizens next year, will grow to 5.9 per cent of GDP in 2004 from 4.3 per cent this year.
But by 2005, the Commission said, "the general government balance improves in all acceding countries," and the average deficit across the 10 is set to drop to 4.1 per cent. Poland's should fall back to 4.9 per cent in 2005.
This year's already high growth figures in the accession states are due to rising exports and a pick-up in industrial output, the report said, while private consumption was robust, receiving support from lower interest rates.
The Baltic states of Latvia and Lithuania are far ahead in terms of current and projected GDP growth. Lithuania is set to post 6.6 per cent growth this year, dipping to 5.7 per cent in 2004 before recovering to 6 per cent in 2005.
Latvia will record 6.0 per cent GDP growth this year. At the other end of the scale, Malta's economy will grow by just 0.8 per cent in 2003, although growth will pick up to 2.9 per cent in 2005, the report said.
The report said that restructuring to transform the central European states from communist command economies meant employment was still contracting in the Czech Republic, Poland and Slovenia.
Inflation across the accession region is set to rise in 2004, to 3.5 per cent from a projected 2.4 per cent this year and 2.5 per cent in 2002.
Slovakia is the poorest performer in terms of inflation, with the Commission forecasting a rate of 7.5 per cent in 2004 from 6.8 per cent this year, while Latvia is expected to post deflation of 0.9 per cent this year.
But the Commission sees these differences gradually disappearing, and expects inflation across the 10 to slip to 3.1 per cent in 2005, by which time the rates will vary in a narrower band from 1.9 per cent in Malta to 4.3 per cent in Slovenia.