EBRD cuts forecasts for some CEE countries
The bank maintained its overall 2.7% growth forecast for emerging Europe but revised down its estimates for some countries
The eurozone crisis continues to have a negative impact on economic performance in emerging Europe, which is likely to live through another challenging year before any real recovery can start, the European Bank for Reconstruction and Development (EBRD) said in a statement on Friday.
Growth in the transition region is expected to drop to 2.7% this year from 4.6% last year, before picking up modestly to 3.2% next year, according to the EBRDs latest quarterly economic assessment.
The banks economists revised down their forecast for Ukraine, which is now expected to grow by just 1% in 2012, a 1.5 percentage point cut from the EBRDs July forecast and compared to expansion of 5.2% last year.
Ukraine is feeling the squeeze from both its two biggest markets, the EU and Russia, the bank said.
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Slovenias economy is expected to contract by 2.5% this year and by 2% in 2012, Hungary is seen shrinking by 1.5% this year and posting just 0.4% growth next year, Croatia is forecast to contract by 1.9% but is seen rebounding by 1.2% next year and Serbia is set to shrink by 0.7% this year and grow by 1.1% the next.
POLAND TO SLOW
Polands growth is seen slowing to 2.5% this year, a slight downgrade from Julys 2.9% forecast and compared with last years 4.3% growth. It is seen slowing further to 2.2% next year. Slovakia is expected to grow by 2.7% this year and by 2.3% next year.
Romania is seen advancing by just 0.5% this year despite strong performance in the second quarter and by 1.9% next year. Bulgarias growth is seen at 1.2% for 2012 and 1.7% for 2013.
Russias growth is seen at 3.2% this year, a slight uptick from Julys forecast of 3.1%, and at 3.3% next year.
The effects of the European recession are spreading further east, the EBRD said. As Russian growth slows down, weighed by the eurozone, economies of the Caucasus and central Asia not closely integrated with the EU markets might start feeling the pain.The pace of cross-border bank deleveraging slowed in the first half of 2012, with foreign banks capital flight easing in the first quarter as a result of the European Central Banks massive liquidity operations, the bank said, but added that the retreat picked up in the second quarter as the impact of the ECB measures waned.Banks have tried to replace the loss in external funding by domestic deposits. As this has been only partially successful, real credit continues to contract in almost all of central and south-eastern Europe and the Baltics, the EBRD said.