CEE banks shape up for Covid-19 battle
Economies and banking sectors in emerging Europe have gone into the coronavirus crisis in good shape. But will they be able to navigate the political fallout from the expected downturn?
There is no such thing as a good time for a pandemic. Nevertheless, it is fair to say that much of emerging Europe is better prepared to deal with a crisis today than at any time since the fall of the Berlin Wall.
A decade of increasingly strong economic growth, falling debt-to-GDP ratios and rapid local capital markets development has left most governments in central and eastern Europe with both the fiscal space and the borrowing capacity to mount a robust response to a local and global downturn.
Moreover, not only did many CEE countries go into the crisis in much better shape financially than their counterparts in Western Europe, they were also quicker to respond to the threat from Covid-19.
The Czech Republic, Poland, Hungary and even Ukraine implemented early and effective lockdowns, in many cases before the first local deaths from the virus. As a result, several have already been able to ease restrictions.
There are weak spots, however. Romania is vulnerable in both economic and healthcare terms, thanks to years of underinvestment in infrastructure and overspending on social giveaways.