Businessweek: Subprime Fallout Coming to Eastern Europe? - by Mark Scott
Subprime Fallout Coming to Eastern Europe? - by Mark Scott
When the shockwaves from the U.S. subprime loan crisis first hit Europe, it appeared that the impact might be limited to the private sector. The European Central Bank scrambled to provide liquidity (BusinessWeek, 8/10/07) for commercial lending, and volatility died back. On Sept. 6 the bank left its official interest rate unchanged, (BusinessWeek, 9/6/07) easing, for now, the risk of mounting credit costs.
According to the European Bank for Reconstruction & Development, the average current account deficit of Southeast Europe—including Romania, Bulgaria, and former Yugoslavian states—will be 12% of GDP in 2007, while the countries of Central and Eastern European will likely post deficits of 7.6%. By comparison, the 13 members of the euro zone posted a current account deficit of 0.1% of GDP in this year's first quarter.
