The new European Union members in Eastern Europe enjoyed strong economic growth last year but are likely to see a slight easing of that growth and rising inflation in 2007, the World Bank said in a report released Thursday.
"Growth is likely to ease in most of the new member states in 2007 as growth slows in the euro area," the World Bank said in a statement released in Warsaw.
The study looked at eight countries in the region that joined the EU in 2004, as well as Bulgaria and Romania, which joined on Jan. 1.
Economic growth in most of the 10 countries "was fueled by strong domestic demand _ consumption _ and private investment" made possible by rising wages and increased borrowing, said Thomas Laursen, a World Bank economist and the report's chief author.
That growth came in spite of currency appreciation against the dollar and the euro in much of the region _ a trend which tends to hurt exporters because it makes their products more expensive in foreign markets.
The bank predicts a slowdown this year in reaction to an expected slowdown in the generally wealthier 13 countries in Western Europe that use the euro.
That is because the euro zone "is a key market for exports" from Poland, Slovakia and other countries in the region, Laursen said.
The report also warned that "a tendency towards higher inflation is emerging."
"While inflation remains well under control in Poland and the Czech Republic, other countries are struggling," the bank said. "In the Baltic countries and to some degree Bulgaria and Romania, strong wage and credit growth are leading to overheating and significant inflationary pressures."
The annual economic growth rate in Poland last year was forecast at 5.7 percent, but will probably slow to 5 percent this year, Finance Minister Zyta Gilowska said Thursday.
Across the region, the Baltic states saw the highest growth, with rates forecast at 11 percent in Latvia, 10.9 in Estonia and 7.8 in Lithuania. Official figures are expected to be released in several weeks.
Even Hungary, the most troubled country in the region, has projected growth of 4.1 percent.