Emerging Europe – what’s next?

September 25, 2009

 

Reuters Central European Investment Summit, September 28-30, 2009

 

The former Communist countries of central Europe have been the last to be hit by the global economic crisis, but th e hit they took was among the hardest. Only big neighbour Russia’s deep plunge into recession is rivaling the sharp fall from record economic growth that’s in store this year for the economies between the former Soviet Union and Western Europe.

 

Global risk aversion and deleveraging exposed the weaknesses that the countries had been able to gloss over during the boom years – which in retrospect appeared to have been, in some countries, a colossal binge bankrolled by cheap foreign credit extended by Western European banks that had to come to an end when funding dried up.

 

Even the specter of a region-wide meltdown lingered over the countries this winter as investors turned a blind eye on the differences between fundamentally sound countries like Poland, and Ukraine, Hungary or Romania, which could avert the threat of default, social unrest and instability only with aid from the IMF and the European Union.

 

But since the IMF and the EU moved in and made clear they would let no country fail, a pickup in risk appetite has driven up emerging European assets to the extent that some investors already worry about the next bubble inflating.

 

Worries remain. Many of the region’s export-geared countries’ recovery will depend on a return of demand for their exports in Western Europe. Unemployment is on the rise. Budget deficits balloon. And the mostly Western-owned banks still face an inevitable rise in bad debt that will continue well into next year and could thwart a fledgling economic pickup.

 

Key policymakers and corporate leaders will discuss these and related issues at the Reuters Central European Investment Summit on Sept. 28-30 in Vienna and Warsaw. We will be blogging about it here.

 

Poland‘s Prime Minister Donald Tusk gestures as he speaks during a conference at the Warsaw Stock Exchange August 28, 2009. REUTERS/Kacper Pempel

2 comments

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Hi,

As biblically prophesied, Europe and the rest of the world will definitely plunge into the greatest economic depression ever. But from the residue of this catastrophic worldwide meltdown, an economically brilliant and strong politically-willed world leader will arise from Europe to provide the needed workable solutions to the global economic mess.

He will create a new economic world order doing away with all the existing foreign currencies and coming up with a single world currency. His system will effectively work so that he will be deemed as the world’s savior.

Posted by rico gueco | Report as abusive

Yeah, right. And when we die we all go to heaven and live happily ever after, ever after, ever after. Spare me, please.

Posted by Stephen Gregory | Report as abusive