Limited progress has been made by non-euro area Member States of the European Union (EU) on economic convergence with the euro area since 2022, according to the 2024 Convergence Report of the European Central Bank (ECB) [link]. This is mainly due to challenging economic conditions.
Over the past two years, the countries under review have been hit by the fallout from Russia’s invasion of Ukraine, which led to a significant weakening of economic activity and soaring inflation. Countries with a history of higher energy dependence on and stronger trade links with Russia were the most affected. Looking ahead, economic activity is expected to strengthen in all of the countries under review, but geopolitical tensions and risks are clouding economic prospects.
As regards the price stability criterion, five of the countries under review – Bulgaria, the Czech Republic, Hungary, Poland and Romania – recorded average inflation rates well above the reference value of 3.3%, while inflation was slightly above the reference value in Sweden (Chart 1). The reference value is based on the three best-performing Member States over the past 12 months, i.e.
Denmark (1.1%), Belgium (1.9%) and the Netherlands (2.5%), taking their average inflation rates over
the past 12 months and adding 1½ percentage points. One outlier, Finland, was excluded from this
calculation.
