Emerging Europe debate: Back from the brink
Emerging Europe had a tough 2009, but as a new year dawns central bankers across the region hope it will bring back economic growth. The debate about regulation and ring-fencing capital begins here as they discuss how to prevent the region from plunging back into recession. Interviews by Chloe Hayward.
HG, Simor The Hungarian economy is expected to recover more slowly than its neighbours. The global crisis had similar initial impacts across the region: external demand slumped and capital inflows halted, pushing most of Central and Eastern Europe into recession. However, Hungary has had some specific difficulties including high private and public debt stocks, much of it in foreign currency. Private indebtedness has forced banks to cut back lending more radically than elsewhere. High public debt necessitated fiscal tightening in the midst of the crisis. Monetary policy was unable to loosen its stance quickly due to financial stability constraints. Most of these country-specific factors will weigh on domestic consumption and investment in 2010 – although external demand will gradually recover, domestic consumption and investment are likely to remain subdued. We expect robust economic growth to return only in 2011.
CZ, Tuma The economic decline bottomed out the November 2009 Czech National Bank forecast and so now we expect the Czech economy to return to moderate year-on-year growth of 1.4%