Economist.com: Eastern Europe in 2008
Eastern Europe in 2008
THE most urgent thing to hope for is a soft landing for economies grown complacent amid perpetual sunshine and friendly faces. Large imbalances and a global credit crunch are an alarming mixture. Lars Christensen, a hawkish analyst of the region at Danske Bank in Copenhagen, notes that twitchy investors in the Baltic states and Bulgaria are already sending money market rates higher, and have driven down the value of the Romanian lei. Some early signs indicate that Santa will be kind. Credit growth is slowing. Estonia’s growth rate and property prices have dropped sharply: bad news for construction companies, but good for everyone else (and its current growth rate of 6% is still mouth-wateringly good by West European standards). But inflation remains far too high, sharply up on the year-end figure for 2006 in every country except Hungary. Higher prices for food and natural gas will make that worse, stoking the pressure on competitiveness.
Labels: Eastern Europe, Economy, EU
