The countries of Central and Eastern Europe (CEEC) show encouraging signs of recovery and are all more or less clearly emerging from transformational recession. In 1994, for the first time since the start of transformation, all these countries recorded positive GDP growth (about 4% on a regional average), declining inflation and slightly declining (though high) unemployment. 1994 was the first year of economic growth after the collapse of the old system in the Czech Republic, Hungary, Slovakia and Bulgaria (Poland, Slovenia and Romania had resumed growth in 1992 and 1993 already). In sharp contrast, all republics of the Commonwealth of Independent States (CIS) still remain in deep depression and have not overcome the twin crisis resulting from the collapse of the command system and the disintegration of the USSR. In the CIS, GDP declined by another 16% in 1994, for the fifth consecutive year already, inflation – though declining somewhat as well – remains at three-digit annual levels (650% on average), and the overall economic, legal and political situation is inflicted with extremely high uncertainties. The CEECs' growth has resulted from a strong upturn in industry (growth by 8% in 1994 on average), especially in Poland, Hungary, Slovakia and Slovenia, and from a further expansion of services. There is some encouraging evidence of industrial restructuring and improved efficiency, again mostly in Poland, Hungary and in Slovenia. Such evidence includes strong labour productivity improvements, rising profits and, last but not least, growing exports. Significantly, the return to growth has not brought increased inflation. On the contrary, inflation has dropped further in most CEECs, but nowhere to single-digit annual numbers. Consumer prices have been rising faster than producer prices. Except for Bulgaria, Slovakia and Hungary, the CEECs' budget deficits were not excessively high. Economic prospects for most CEECs are now reasonably good – certainly much better than a year ago. However, growth will accelerate in 1995 only in the Czech Republic; in Poland and in Slovenia it will stay at last year's high level. On the other hand, Hungary, Slovakia and Romania will not maintain their 1994 growth performance. The CIS economies remain depressed and the individual republics cannot yet be ranked according to their growth prospects, but rather in terms of GDP decline and the scale of instability.