THANKS TO A GOOD domestic demand and a limited dependence on US trade, many economies in Central and Eastern Europe have been able to sustain growth. However, due to the immersing global financial crisis, these countries cannot resist this severe and tough development. As a result, SEB has made a general downward adjustment in the growth prognoses. In the recent issue of “Eastern European Outlook: Resilience is eroding”, GDP growth is dropping from an average of 6 percent this current year to 4.5 and 4.8 percent in 2009-2010.
Mikael Johansson, editor for Eastern European Outlook
presents SEB:s prognose for the GDP growth in Russia.- Inflation is dropping in most countries. However, the decrease will be slow in Russia and Slovakia, comments Mikael Johansson, SEB Financial Analysis and editor for Eastern European Outlook.
CZECHIA, HUNGARY AND Slovakia will all be hit hard by the decrease in the Euro zone. But it is the Baltic states and Ukraine that will be suffering the most with their great external imbalances making them vulnerable to global credit restrictions.
- Estonia and Latvia are experiencing an extended recession and the financial decline will be drawn-out. The job market will deteriorate significantly and previous increases in retail by 20-30 percent have turned into downright plunges. The Baltic splurge is over. However, the extremely large deficits in trade balance are beginning to soften. Lithuania is experiencing a soft landing so far and as opposed to Estonia and Latvia, there won’t be a decrease in growth.
Bo Enegren, Economist, SEB Financial Analysis, Mikael Johansson,
editor for Eastern European Outlook and Mats Olausson, Chief
Strategist, Emerging Markets, TCM.IN UKRAINE, the financial outlook has darkened relatively fast with an obvious deceleration from a 6.5 percent growth this current year to 3.5 percent in 2009 and a solid decline in the stock market. Mikael Johansson reports about obvious parallels to the Baltic development, from previous overheating with strong growth to a sudden break in the economy.
RUSSIA AS WELL AS Poland distinguishes themselves from the strong decline with a more modest deceleration. Thanks to financial buffers with large budget and current account balance surpluses; there is capacity in Russia to counter decreased demand with a more expansive fiscal policy. Poland’s soft landing is a result of a more closed economy with less imbalances and a continued strong growth.
- Poland’s objective to transfer to the Euro in 2011 is a little too optimistic. I believe 2012 or 2013 is more likely, says Mikael Johansson.
Emelie Ring