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Emerging Europe is Likely to Live through another Challenging Year: New EBRD Economic Forecast

Published: October 26, 2012 | 12:24 pm
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According to the latest Regional Economic Prospects the Bank’s quarterly economic assessment – growth in the transition region is expected to drop from 4.6 per cent in 2011 to 2.7 per cent in 2012 before picking up modestly to 3.2 per cent in 2013.

Emerging Europe is likely to live through another challenging year before any real recovery can start, EBRD economists say.

The crisis in the Eurozone is continuing to negatively affect economic performance in the EBRD’s region of operations. However, thanks to the recent actions by the European Central Bank as well as announced European measures toward bank resolution and banking union the downside risks to growth have reduced somewhat.

The EBRD’s region of operations fared worse in the first half of 2012 compared to the second half of 2011, with central Europe, the Baltics and south-eastern Europe noticeably slower.

Economists revised down their forecast for Ukraine, which is now expected to grow by a mere 1 per cent in 2012 – a 1.5 percentage point reduction from the EBRD’s previous forecast in July – compared to 5.2 per cent in 2011. Ukraine is feeling the squeeze from both its two biggest markets, the EU and Russia.

The global economic instability and the eurozone crisis have had an impact on all regions. Georgia’s economic activity accelerated in the first half of 2012 and remains strong. As the external financing package mobilised by a range of donors during the twin crisis of 2008 has largely been exhausted, the authorities have pursued private sources of financing including with support of a public fund responsible for supporting private investment in key sectors.

The EBRD’s next economic outlook is expected in January 2013.


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