25 years on from the “Fall of the Wall”

The fall of the Berlin Wall marked the start of the transition from central planning to market-based economies in Central and Eastern Europe, which in turn paved the way for a sharp rise in prosperity. But 25 years on, concerns are rising that income convergence has stalled. In truth, the picture is more complex. Those economies that have performed best over the past 25 years are those that have made the most progress with reforms. This pattern is likely to repeat itself over the next 25 years. Countries such as the Czech Republic and Poland are likely to see incomes rise further towards Western European levels, but the former Soviet Union countries (excluding the Baltics) are likely to lag behind. Meanwhile, Hungary could slip from leader to laggard.