November 26, 2008

Growth in emerging Europe to slow

The economies of Central and Eastern Europe and Central Asia are set for pronounced slowdowns in 2009, a bank that supports development in those regions said.

The European Bank for Reconstruction and Development said Central Europe and the Baltic states of Estonia, Latvia and Lithuania will see growth slow from 4.3 percent this year to 2.2 percent in 2009.

Southeastern Europe will see their growth gaining from 6.2 percent in 2007 to 6.55 percent in 2008. But, that pace should slow considerably to 3.1 percent next year, the bank said.

In Mongolia and the Commonwealth of Independent States -- former Soviet bloc countries that include Armenia, Azerbaijan, Ukraine, Georgia and Russia -- growth is predicted to fall from 8.5 percent this year to 3.4 percent next year.

EBRD's chief economist Erik Berglof said continued growth in these regions was testament to remarkable reform achievements, the bank said in a statement.

But, the bank warned that the global credit crisis could cause a lasting and substantial slowdown in credit expansion. In addition, there was a risk that slowing economies worldwide could impact the region if external funding suddenly fell away, the report said.