Eastern European Outlook: Shaky recovery, budget austerity, slow thaw
in lending
(Thomson Reuters ONE) - Eastern Europe is the region hardest hit by the global credit crisisand recession, largely due to its relatively large exposure toforeign currency borrowing. During the summer, the economic cycle hasnevertheless bottomed out in Eastern Europe as well. But the recoverywill be shaky and uneven. The main reasons are public sector budgetconsolidation and the fact that credit tightening will ease onlyslowly, predicts SEB in its October 2009 issue of Eastern EuropeanOutlook.Exports will gradually strengthen. Domestic demand will remain weakin the coming year, however; households will be squeezed by a weakwage and salary trend and by rising unemployment, while corporatecapital spending will be hampered by large idle production capacityand cautious lending practices."Our conclusion is that the recovery in Eastern European will behighly dependent on a continued upturn in the world economy,especially in the euro zone, which is a major export market forEastern Europe," says Mikael Johansson of SEB Economic Research,Chief Editor of Eastern European Outlook.Poland is the only EU country to start its recovery without havingfallen into recession, and Eastern European Outlook expects acontinued gradual strengthening of Polish growth in 2010-2011. Russiawill recuperate at only a moderate pace from its historic GDP declinein the first half of 2009, despite being buoyed by higher commodityprices. The Ukrainian economy will return to only weak positivegrowth in 2010. Of the three Baltic countries, Estonia is bestpositioned for recovery, with GDP growth ending up around zero in2010 and rising the year after. In Latvia and Lithuania, GDP willcontinue to shrink next year, though only moderately. These countrieswill resume positive growth on an annual average basis only in 2011.In many countries of the region, certain key economic imbalances suchas large current account deficits and high wage-driven inflation havebeen wiped out. Remaining as challenges are necessary budgetcorrections after very large 2009 deficits in many countries, higherthan in the euro zone. Thanks to continued international bail-outloans, Eastern European Outlook expects hard-pressed Latvia andUkraine to avoid suspension of payments.In the Baltics, depressive economic forces will remain in place nextyear. Painful austerity policies will continue, including further paycuts to restore lost competitiveness. Political tensions haveincreased, especially in Latvia and Estonia. There is a risk thatexchange rate worries will re-emerge in the run-up to the LatvianParliament's vote on the 2010 budget. It is also still an openquestion whether Estonia will meet the vital budget deficit criterionfor the desired euro zone accession in 2011."Our main scenario is that the Baltic countries' fixed exchange ratesagainst the euro will survive and that the international loanprogramme will remain on track. The coalition government in Latviawill probably work out a new austerity proposal for 2010 that the EU,the IMF and the Nordic countries will accept," Mr Johanssonconcludes.SEB is a North European financial group serving some 400,000corporate customers and institutions and five million privateindividuals. SEB offers universal banking services in Sweden, Germanyand the Baltic countries - Estonia, Latvia and Lithuania. It also haslocal presence in the other Nordic countries, Poland, Ukraine andRussia and a global presence through its international network inmajor financial centers. On 30 June 2009, the Group's total assetsamounted to SEK 2,374bn (~EUR 220bn) while its assets undermanagement totalled SEK 1,267bn (~EUR 120bn).The Group has about20,500 employees. Read more about SEB at www.sebgroup.com._____________________________________________For further information, please contact:Mikael Johansson, Chief Editor, Eastern European Outlook, SEBEconomic Research, tel. +46 8 763 80 93, mobile +46 70 372 28 26.Elisabeth Lennhede, Press & PR, tel. +46 70 763 99 16,Elisabeth.lennhede(at)seb.sehttp://hugin.info/1208/R/1346136/323273.pdfhttp://hugin.info/1208/R/1346136/323274.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 07.10.2009 - 10:01 Uhr
Sprache: Deutsch
News-ID 6666
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