Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Economists at the Warsaw School of Economics have concluded that 11 Central and Eastern European (CEE-11) countries, which joined the European Union after 2004, have made exemplary use of their accession for two decades, experiencing rapid economic convergence. However, their analysis, published on October 10, 2025, also warns of a significantly less optimistic outlook for the period between 2025 and 2035, citing demographic shifts and insufficient innovation as primary threats to sustained growth.
Two Decades of Rapid Convergence
The study, which examined the economic progress of Poland, Bulgaria, Croatia, the Czech Republic, Estonia, Lithuania, Latvia, Romania, Slovakia, Slovenia, and Hungary between 2004 and 2024, highlighted an exceptional period of growth. These CEE-11 nations collectively developed at nearly twice the rate of the EU-15, the bloc’s wealthier Western members.
The average growth rate for the CEE-11 group reached 3.2%, significantly higher than the 1.6% observed in the EU-15, with Poland recording the fastest growth at 3.8%. This accelerated development enabled the CEE-11 to close nearly 30 percentage points of the development gap with the founding EU countries, measured by GDP per capita in purchasing power parity.
Dr. Piotr Maszczyk, head of the Department of Macroeconomics and Public Sector Economics at the Warsaw School of Economics, described this period as a “real success story,” noting that some economists refer to these two decades as an “economic miracle.” The region’s growth also demonstrated resilience, maintaining a high pace despite global financial crises, the pandemic, and the conflict in Ukraine.
Challenges Loom for the Next Decade
Despite past successes, the outlook for the coming decade (2025-2035) is considerably less optimistic. Researchers from the Warsaw School of Economics have developed three scenarios—baseline, cautionary, and optimistic—with the realization of each depending on countries’ ability to implement institutional reforms.
The cautionary scenario posits a halt in the current convergence trend, leading to a widening development gap between post-socialist economies and the EU-15. Conversely, an optimistic scenario envisions Poland and other CEE-11 nations reaching parity with the EU-15 in GDP per capita (PPP terms) by 2035.
Key Threats to Future Growth
Academics have identified two primary threats to the region’s economic future. The first is demography, with the region experiencing depopulation, particularly Poland, which is heading towards a fertility rate below one, significantly lower than the 2.1 required for generational replacement. This demographic trend could see Poland’s population shrink to 30 million by 2060, with an increasingly aging populace.
The second major concern is innovation. Dr. Maszczyk pointed to insufficient public and private investment in research and development (R&D) across the region. Polish businesses, for instance, rank among the lowest in Europe for AI adoption, with only 5.9% of companies employing ten or more people utilizing AI-based solutions in 2024, a figure only marginally better than Romania’s.
Addressing Institutional Hurdles
A significant challenge for CEE-11 countries is overcoming what researchers term ‘patchwork capitalism.’ This institutional arrangement is characterized by inconsistent and often disordered regulations, which are perceived as a blend of elements from various historical regimes, including feudalism, pro-capitalism, socialism, and modern Western European capitalism. Entrepreneurs frequently express concerns over this regulatory environment.
Divergent Economic Paths
Within the CEE-11, individual country trajectories present a mixed picture. Romania stands out as a “particularly positive case,” having achieved the fastest rate of narrowing its development gap with the EU-15, attributed to a combination of strong GDP growth and favorable demographic changes.
In contrast, Hungary recorded a slower average growth rate of 2% between 2004 and 2024, falling below the CEE-11 average and only slightly above that of the older EU member states. This slower trajectory is projected to persist through 2035, with economists citing Hungary’s particularly challenging systemic transition prior to EU accession, including a deep transformational recession in the mid-1990s, as a contributing factor.
Outlook for the Next Decade
The analysis from the Warsaw School of Economics underscores the remarkable economic progress of Central and Eastern European countries since their EU accession, often termed an “economic miracle.” However, the study also issues a clear warning: the next decade will test the region’s ability to maintain this momentum, necessitating significant reforms to address demographic pressures, foster innovation, and streamline institutional frameworks.
