Exclusive outtakes from industry leaders
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.
“We’ve spent some time explaining the differences,” Hampl said, making little effort to disguise his irritation with the rest of the world’s tendency to think about central Europe as a homogeneous region. “If you look at the GDP per capita in PPP (purchasing price parity) terms…between the United States and Panama it’s not as huge as the GDP difference in PPP terms between Ukraine and Slovenia.”
Ludwik Sobolewski, head of the Warsaw Stock Exchange, struck a similar chord. ”In the second half of 2008 the Polish economy and stock exchange were treated very much as all other markets in our
region… We suffered a lot from this negative assessment of the region triggered by some countries we all remember… Ukraine, Hungary, the three Baltic states.”
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.