The CEE economies showed convincing signs of recovery in 2010 and the more supportive macroeconomic environment translated into some improvement in household financial conditions, even if the propensity to save continued to prevail over that to consume.
The development in household financial conditions in early 2011 looks also promising but is confronted with a growing number of challenges. The recent increase in food and energy prices is an issue to monitor as are the related downside risks on economic activity. Austerity programmes and policy initiatives concerning pension systems also deserve careful monitoring in some countries.
With economic recovery gaining momentum, we expect further normalisation in labour market conditions and consolidation in the growth of household disposable income to remain the key drivers for the accumulation of net financial assets over the next couple of years. At the same time, the gradual improvement in job market conditions and more solid income growth should also support some resumption of household debt appetite.
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