Europe’s East Will Soon Overtake Club Med for Living Standards

(Bloomberg) -- Almost four decades after the Soviet Union collapsed, living standards in the countries that broke free from its orbit to join the European Union are set to leapfrog the bloc’s south.

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Per capita income in Slovenia will surpass that of Italy by 2029 when adjusted for purchasing power, according to the latest International Monetary Fund projections. Lithuania will draw level on that metric, while Poland won’t be far behind.

The shift would make good on promises for wealth in the nations that became EU members from 2004 to grow closer to the currency union’s richer west. That process didn’t happen as rapidly as envisaged, with convergence suffering repeated setbacks from the volatile 1990s period to 2008’s global crash and the ensuing debt crisis.

Perhaps the latest progress, too, is the result of trends that weren’t foreseen by economic planners: While the central and eastern European newcomers have seen output surge thanks to foreign investment, access to EU’s market and funds, its also been helped by slower growth in Italy.

The more affluent footing is already reaping benefits: Outflows of workers craving fatter pay checks elsewhere has begun to reverse. Governments in the region also hope that proportionally larger economies will translate into heftier political clout as they lobby Brussels over things like increased defense spending.

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