World Bank, EBRD, EIB: Credit Crunch Risk Threatens Eastern Europe
Major economic institutions have warned Monday that there is an increasing risk of a credit crunch in Central and Eastern Europe.
The World Bank, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) made a joint statement at a conference in Istanbul, Turkey
"There are increasing risks of a major credit crunch in the region", the banks said.
"I think it's a warning from the international banks that they (investors) should be really aware of the risks that persist there. There is certainly strong potential for the financial crisis in Eastern Europe to get worse in the next six months ... The potential for bad loans is still rather large“, Ralf Wiegert, an Frankfurt-based economist with IHS Global Insight stated.
The three international lenders said banks in Central and Eastern Europe should tackle bad loans and "undertake loan restructuring on a commercial basis and recapitalize as needed."
The institutions, which launched an initiative to rescue the region in February, said they had so far made available EUR 16,3 B in assistance to the region.
Some countries in Central and Eastern Europe have been particularly badly affected by the global economic crisis. The IMF expects the region's economy to shrink by 5,0% in 2009 and grow 1,8% in 2010.
- » Bulgaria to Host 2015 IMF, World Bank Meeting
- » Bulgarian Finance Minister Meets IMF Representatives in Washington
- » Bulgaria's Municipalities to Get EUR 630 M Under EU Program
- » Greece Launches EUR 3 B Bond Emission on Markets
- » Romanian Senate Agrees on EUR 100 M Aid to Moldova
- » Bulgaria's Lawmakers Adopt Consumer Credit Act Amendments
as I said, I agree with you, except for Russia. Russia is NOT diversifying its economy, at least not in the last years, in the contrary as I can tell you from personal experience.
One minor thing: also South Korea, Vietnam and almost all other countries in South-East Asia except Indonesia are right now in the deepest recession ever.
In the long run, as mentioned, I agree.
You said it all okay but still short sighted. Let me tell you why.
Russia is diversifying by using the profits from the natural resources. Today oil for example is around $70 US per barrel. Those prices are good and profitable for the entire world of oil production. Let me elaborate on the natural resources also that this is the guaranteed winner and profit of the future. As you can see that the world economies are recovering and the demand for commodities will be gigantic. Only China for example can consume all the Russian oil production. The fact of the matter is that itвЂ™s not only China, which is booming. The entire Asia pretty much did not see much of a recession (Vietnam, South Korea, etc.).
I can go on and on but let me summarize it a bit. The entire world population is growing and the todayвЂ™s globalized world is spreading the wealth. India is 1.1 billion, China is 1.3 billion, Africa is growing also and so is Eastern Europe.
Here I will give you a little tip where the money will be so you can make some of it.
AGRICULTURE is the name of the game, all that wealth I was talking about makes people consume more (Chinese are eating more steaks, etc. and the Indian are riding Harley Davidson believe it or not). Anyways the bottom line is that Agriculture and Commodities will be the winner and Eastern Europe happens to be rich and well situated for both of them. Did you know that today the sugar for example was at 28 years high?
There I go again with another money tip, INFRASTRUCTURE is booming in the entire Asia and it will be doing very well in Eastern Europe also. Trust me you can bet your money on it.
Western Europe and the EU must UNDERSTAND that Europe should be ONE and UNITED. If they continue to divide Europe to pieces, all Europeans will lose but Western Europe will end up being the biggest loser because of its saturated and limited potential (natural resources, market and manpower)!
although I agree in principle with you that Eastern Europe has been (and will be in the long run) a success story economically, I would like to differntiate a bit.
As for Russia: their comparatively strong development in the last years is almost exclusively built on their natural resources gas and oil, which makes them also very vulnerable. In times of a crisis when the prices for these commodities are going down, Russia is facing very hard times, as we see now. And almost all of their remaining industry is not competitive and on the verge of bankruptcy. Russian policy has failed completely to built up a more competitive economy in general.
As for the other countries, like Czech Republic, Romania, Hungary, and to a certain extent also Bulgaria: the strong growth in several sectors is driven mainly by foreign investment. Obviously these countries are considered as high potential investment destinations which speaks for itself. On the other hand, in times of crisis a lot of money is pulled out of Eastern Europe. Therefore the numbers to which you refer don't reflect yet the recent economic crisis. It is obvious that Eastern Europe will also need a few years to recover from this crisis.
All right, I guess we need to talk numbers.
First of all I must admit that the vegetable guy (chushki) is sarcastically amusing.
Anyways the article is on all of EASTERN EUROPE and not only Bulgaria.
LetвЂ™s talk numbers; first of all 19 years capitalism right?
Here a dose of reality!
The size of the economy of Poland (GDP growth rate 4.8%) is TWO times larger than that of Belgium, Sweden, Greece, Austria, Switzerland, Norway, and THREE times larger than that of Portugal, Denmark, Finland, Ireland.
The Ukrainian economy (GDP growth rate 2.7%) is larger than that of Austria, Switzerland, Norway, Denmark, Finland, Portugal, and Ireland.
The Romanian (GDP growth 7.1%) and Czech Republic (GDP growth 3.0%) economies are both larger than those of Portugal, Denmark, Finland and Ireland.
And of course Russia has the 7th largest economy in the world (GDP growth 5.6%)which happens to be the a larger economy than all of the European countries EXCEPT Germany!
So as you see based on the 2008 stats the Eastern European countries are gaining speed and a momentum with money steadily shifting there!
Check for yourselves here:
George, I couldnt agree more. The democracy and economic bedrock established by the Stanishev government will propel Bulgaria back into its rightful place as the financial powerhouse of Eastern Europe - that is unless these GERB fascists plunder our reserves for their own means.