Eastern European Outlook: Renewed domestic demand but moderate GDP growth
(Thomson Reuters ONE) -
The export-led recovery of the past year in Eastern Europe ? which in many
places has been stronger than in Western Europe ? is continuing. But the export-
oriented manufacturing upturn is now entering a more mature phase, due to
decelerating global growth. Meanwhile domestic demand is awakening, thanks to
the resumption of real wage growth, stabilising labour markets and a gradual
thaw in still-inhospitable credit conditions. Eastern Europe was the region of
the world that was hardest hit by the global credit crisis, mainly due to its
relatively large foreign loans. Overall GDP growth will continue at a moderate
pace in most of the region during 2011-2012, writes SEB in its October 2010
issue of Eastern European Outlook.
A special theme article discusses the internal devaluations in the three Baltic
countries. Its conclusions are that the wage-cutting process has now largely
ended and that the Baltics is recapturing export market shares.
"Despite increased global economic risks, mainly via the United States, we
continue to have a relatively optimistic fundamental view of Eastern Europe. Our
GDP forecasts are relatively unchanged since the last Eastern European Outlook
in March and remain above consensus. Eastern European exports generally appear
to be competitive, which is evident because these countries are gaining market
shares. In addition, their trade with the US is very small," says Mikael
Johansson, Head of CEE Research at SEB and Chief Editor of Eastern European
Outlook.
Economic growth in the six countries covered in the report will not, however,
return to its previous high rates ? which led to severe imbalances ? but will
instead barely reach its potential level. The report points out structural
obstacles to growth, such as sizeable labour market and emigration problems in
all three Baltic countries and a slow pace of reform in Russia. In addition,
there will be fiscal tightening in Poland and Ukraine and, over time, in Russia
as well. In the Baltics, Latvia will stick to fiscal austerity.
"Russia will enjoy decent growth, sustained by high commodity prices and in the
short term also by continued expansionary fiscal policies. Consumption has
started to rebound this year and will be an increasingly important economic
engine. Meanwhile Russia ought to be capable of achieving higher GDP growth than
around 5 per cent. Reform efforts are moving sluggishly, and more would need to
be done in education and in the judicial and transport systems, for example,"
says Andreas Johnson, Russia and Ukraine analyst at SEB Economic Research.
The new Eastern European Outlook forecasts in brief:
* Russia's GDP, after rising 4.6 per cent this year, will grow by 4.5 per cent
in 2011 and 4.8 per cent in 2012, sustained by continued high but
stabilising commodity prices.
* Poland's economic growth will be increasingly driven by capital spending and
will speed up from 3.5 per cent this year to 4.0 per cent in 2011 and 4.5
per cent in 2012.
* Ukraine's growth, a solid 5.2 per cent this year, will diverge from the
pattern in other countries by slowing down a bit to 4.4 per cent in 2011 and
4.2 per cent in 2012, in the wake of austerity measures and reforms required
by its lender, the IMF.
* Estonia's GDP will climb by 2.3 per cent this year and after that by 4.0 per
cent annually, but its euro zone accession in 2011 may lead to higher growth
via more foreign direct investments. The government will ease its tight
fiscal policy next year.
* Lithuania's economic growth will end up at 1.0 per cent in 2010,
accelerating to 4.0 per cent in 2011 and 4.5 per cent in 2012. Fiscal policy
will become more neutral after tough belt-tightening.
* Latvia, which is lagging behind Estonia and Lithuania in its recovery and
will post a further average GDP decline of 1.5 per cent in 2010, will return
to positive year-on-year growth this autumn. GDP will rise 4 per cent in
2011 and 5 per cent in 2012, despite continued relatively tough budget
consolidation after the October parliamentary election.
Inflation is now gradually rising from historically low levels in Russia and
Ukraine. The Baltics will see a resumption of moderate inflation after earlier
deflation pressure. Budget deficits are high but will shrink steadily. Public
debt will continue climbing somewhat but is moderate or low compared to Western
countries. For example, all six governments will end up below the Maastricht
debt criterion for the euro zone: no higher than 60 per cent of GDP.
For further information, please Press contact
contact Elisabeth Lennhede, Press & PR
+46 70-763 99 16
Mikael Johansson, Chief Editor, elisabeth.lennhede(at)seb.se
Eastern European Outlook, SEB
Economic Research
+46 8 763 80 93, mobile
+46 70 372 28 26.
Andreas Johnson, SEB Economic
Research
+46 8 763 80 32, mobile
+46 73 523 77 25.
SEB is a leading Nordic financial services group. As a relationship bank, SEB in
Sweden and the Baltic countries offers financial advice and a wide range of
financial services. In Denmark, Finland, Norway and Germany the bank's
operations have a strong focus on corporate and investment banking based on a
full-service offering to corporate and institutional clients. The international
nature of SEB's business is reflected in its presence in 20 countries worldwide.
On 30 June 2010, the Group's total assets amounted to SEK 2,318bn while its
assets under management totalled SEK 1,328bn. The Group has about 20,000
employees. Read more about SEB at www.sebgroup.com.
[HUG#1449279]
Press release PDF:
http://hugin.info/1208/R/1449279/391228.pdf
EEO Oct 2010_en:
http://hugin.info/1208/R/1449279/391229.pdf
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Source: SEB via Thomson Reuters ONE
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Datum: 06.10.2010 - 10:01 Uhr
Sprache: Deutsch
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