All CEECs, with the exception of Hungary and Croatia, performed well in 1995. GDP rose by 5.5 percent on average. Private consumption and gross investment were essential in inducing growth. Inflation was falling, although remaining still high according to Western standards in most countries, especially in Romania and Bulgaria, but also in Hungary and Poland. Budget deficits were either quite low and under control or otherwise apparently compatible with continuing disinflation. Rising profits became a major source of financing investment. The expansion in output was due to high productivity gains; unemployment rates decreased only slightly. Exports and imports were rising faster than GDP, indicating growing internationalization of the CEECs. Although imports were generally increasing faster than exports, current account deficits did not deteriorate as much and were largely compensated by capital inflows – direct investments, but also short-term speculative capital. In general the currencies in the region appreciated in real terms. In 1996 the slowdown of economic growth in the EU might have a dampening effect on CEEC exports. The WIIW forecast for 1996 and 1997 indicates a convergence of growth rates in the individual CEECs to about 5 percent p.a. GDP growth will be slightly slower than 1995 in most countries, with the important exception of Hungary, after successful stabilization, and Croatia, after the peace treaty of Dayton. Inflation will continue to decline. Unemployment will decrease only moderately and remain on high levels. Russia may arrest the decline in 1996 and resume growth in 1997, as might Ukraine.