Exclusive outtakes from industry leaders
A surge in portfolio inflows is flooding into emerging central Europe, although yield-hungry investors are picking solid policy and higher growth over countries still struggling to put the crisis behind them.
After deep contractions across the region, a two-speed recovery is underway, with countries boasting better debt fundamentals like Poland and the Czech Republic for the moment ahead of those who depend on foreign lending.
Investors are also dipping into countries like Hungary, but struggles by the new centre-right Fidesz government to get its budget deficit under control mean it is lagging for now, along with fellow International Monetary Fund benefactor Romania.
“There has… been clear differentiation between the more robust and the weaker economies of the region,” Goldman Sachs wrote in a research note on the region.
An invitation to the Reuters Central European Investment Summit may sound perfectly acceptable to many policy makers and executives but not to Czech central banker Mojmir Hampl. It’s not that he objected to visiting our Vienna office and being interviewed by a crew of editors — Hampl was ready and willing to do that. He just questioned the very idea of lumping together all the different countries in a very diverse region.
“I’m a bit disappointed that the key topic is how the Central and Eastern European region will develop,” Hampl told us, reviving a complaint often heard around the region. It’s a serious issue, one that has bothered many policy makers in central European countries, who grew frustrated at the height of the financial crisis that investors were not differentiating between those with sound fundamentals such as the Czech Republic and Poland and those on decidedly shakier ground.
By Petra Spescha
European economists have been nearly unanimous about what Europe’s recovery from the crisis will look like on a chart: L-shaped — a severe slump with a prolonged period of flat or minimal improvements in the economy.
But at the Reuters Central European Investment Summit Ewald Nowotny created a new shape when he tried to clarify a statement he made to an Austrian newspaper earlier this month about the economic turnaround.
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.
from Shop Talk:
"Our lives are incredibly chaotic," said the 57-year-old CEO, who says he has found an easy way to step up his exercise and burn off calories from some of his favorite foods, such as Campbell's tomato rice soup and a grilled cheese sandwich made on his company's Pepperidge Farm bread.
Global markets are tanking, investors are hoarding cash and the financial crisis has hit central and Eastern Europe. Where do you run when the world is on fire?
We asked that very question — or a watered-down version of it, at least — to the executives and policymakers at this week’s Reuters Central European Investment Summit in Vienna.
Talk in western Europe of possibly nationalising private banks to save them from the credit crisis is sending shivers down the spine of policymakers in ex-communist central Europe.
They remember how their government controlled financial systems completely collapsed in the 1990s and threatened to take the countries’ economies along with them due to pouring money into firms with little prospect of returning it.
EU governments have been reluctant to back clean technologies — such as carbon capture and storage (CCS) that could sharply reduce pollution from coal — with cash, potentially killing their future, Czech power utility CEZ told the Reuters Central European Investment Summit this week.
But Wolfgang Ruttenstorfer, the head of Austrian oil and gas group OMV, reckons cutting carbon emissions is inevitable in the long run, despite the financial crisis and its impact.
East European economies have weathered the global credit crunch so far, but they are becoming increasingly vulnerable and governments must tighten fiscal policy to avoid overheating, said Christoph Rosenberg, Senior Regional Representative Central Europe and Baltics at the IMF during his presentation at the Reuters Central European Investment Summit.
Recent events also highlighted downside risks for the region, said Rosenberg.
In its a report on the world economic outlook published on Wednesday, the IMF said it had revised downward all of its 2008 GDP forecasts for EU members in east Europe, with the exception of Lithuania which remained unchanged.