Emerging countries to suffer from eurozone contagion
by Dean Carroll
18 October 2011
Emerging European nations are likely to experience a slowdown in economic growth next year as the contagion from the eurozone crisis spreads, it has been claimed. In the report "Regional Economic Prospects" released today, the European Bank for Reconstruction and Development made the prediction.
The document stated: "Increased stress in the eurozone could have an even more severe impact on emerging Europe, this time around. The latest forecasts assume a protracted, but ultimately contained eurozone debt crisis." The EBRD revised down predictions for 2011 economic expansion in the region from 4.8 per cent down to 4.5 per cent. Growth in 2012 is now projected to reach 3.2 per cent, compared with the previous predictions of 4.4 per cent that were expected three months ago.
Explaining the reasons for the downgrade, the EBRD report stated: "The downward revision in 2012 economic forecasts reflects the prospect of much slower growth in central and south-eastern European countries, which are particularly vulnerable to eurozone stress. Growth in Russia and other CIS countries is less affected by events, in the eurozone, and growth there is expected to still be quite strong."
This document also revised 2012 growth forecasts in the central Europe and the Baltic states region to 1.7 per cent, down from the 3.4 per cent projected in July, with the region's strong links to the eurozone translating into much weaker growth. Growth was downgraded most for Hungary and the Slovak Republic, the two transition countries that are the most exposed to the single currency problems. Southern and Eastern Europe was said to be growing at 1.7 and 1.6 per cent in 2011 and 2012 respectively - with the 2012 growth rate more than 2 points below the July forecast.
The outlook has worsened most for Albania, Romania and Serbia - which were heavily exposed to the troubled Greek economy. Turkey's growth was expected to slow down significantly to 2.5 per cent, "as a result of declining capital inflows and credit growth, as well as weakening external demand". An EBRD spokesman added: "Recovery further east will be much less affected by the eurozone turmoil, as commodity prices are expected to remain elevated due to demand from still-growing emerging markets.
"Growth in Russia will remain reasonably strong particularly in the run-up to elections in 2012 and output there is expected to grow by 4 per cent in 2011 and by 4.2 per cent in 2012. This development will support expansion even in the non-commodity exporting countries of the CIS, which depend on Russia for exports and remittances. As a result, expansion in the Eastern Europe and Caucasus region, and Central Asia, will only slow down by about 0.7 percentage points in 2012 - compared with the July projections."
The document stated: "Increased stress in the eurozone could have an even more severe impact on emerging Europe, this time around. The latest forecasts assume a protracted, but ultimately contained eurozone debt crisis." The EBRD revised down predictions for 2011 economic expansion in the region from 4.8 per cent down to 4.5 per cent. Growth in 2012 is now projected to reach 3.2 per cent, compared with the previous predictions of 4.4 per cent that were expected three months ago.
Explaining the reasons for the downgrade, the EBRD report stated: "The downward revision in 2012 economic forecasts reflects the prospect of much slower growth in central and south-eastern European countries, which are particularly vulnerable to eurozone stress. Growth in Russia and other CIS countries is less affected by events, in the eurozone, and growth there is expected to still be quite strong."
This document also revised 2012 growth forecasts in the central Europe and the Baltic states region to 1.7 per cent, down from the 3.4 per cent projected in July, with the region's strong links to the eurozone translating into much weaker growth. Growth was downgraded most for Hungary and the Slovak Republic, the two transition countries that are the most exposed to the single currency problems. Southern and Eastern Europe was said to be growing at 1.7 and 1.6 per cent in 2011 and 2012 respectively - with the 2012 growth rate more than 2 points below the July forecast.
The outlook has worsened most for Albania, Romania and Serbia - which were heavily exposed to the troubled Greek economy. Turkey's growth was expected to slow down significantly to 2.5 per cent, "as a result of declining capital inflows and credit growth, as well as weakening external demand". An EBRD spokesman added: "Recovery further east will be much less affected by the eurozone turmoil, as commodity prices are expected to remain elevated due to demand from still-growing emerging markets.
"Growth in Russia will remain reasonably strong particularly in the run-up to elections in 2012 and output there is expected to grow by 4 per cent in 2011 and by 4.2 per cent in 2012. This development will support expansion even in the non-commodity exporting countries of the CIS, which depend on Russia for exports and remittances. As a result, expansion in the Eastern Europe and Caucasus region, and Central Asia, will only slow down by about 0.7 percentage points in 2012 - compared with the July projections."
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