CEE Congress: Growth set to fall in 2012

Both the eurozone crisis contagion and the deleveraging of Western banks active in CEE were highlighted as key reasons for the predicted slowdown in economic growth for emerging European countries at the 2012 unquote" CEE Congress.

Blavy believes the eurozone itself will see economic recession in 2012 of around 0.3%, which will also impact countries that are reliant on exports to Western Europe, with CEE countries being particularly exposed.

The IMF expects Turkey and the Baltic countries to be particularly badly affected. Turkish GDP growth is set to fall from more than 8% in 2011 to around 2.3% this year. The country is also suffering from a substantial current account deficit that could drive inflation to as high as 10.4% in 2012.

Despite the issues currently facing CEE countries, the region is set to perform better than was expected late last year. Blavy cited increasing capital inflow into CEE in Q1 as a positive trend, while growing optimism that the eurozone will hold together could also help prevent further contagion in the region.

However, if the eurozone crisis were to escalate further, the majority of CEE countries could see GDP impacted by as much as 3%, as the region remains vulnerable to conditions in its more developed Western neighbours.

unquote" wishes to thank SJ Berwin, IPES, CSOB, Ernst & Young for sponsoring the event.

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