LONDON Jan 21 Economic growth in emerging
Europe and North Africa will pick up to 3.1 percent this year,
benefiting from an easing of the euro debt crisis, development
bank EBRD said on Monday.
Although slightly trimmed from earlier forecasts, the
prediction by the European Bank for Reconstruction and
Development is an improvement from last year's 2.6 percent
growth rate for the region under its remit.
The bank had predicted 3.2 percent growth for 2013 in its
previous forecast given in October.
"The 2013 forecast represents a marginal worsening relative
to our October figure. At the same time, downside risks to the
outlook have continued to recede as the likelihood of further
deterioration of the Eurozone crisis diminishes," said the EBRD,
which was set up in 1991 to support ex-Soviet bloc countries.
Excluding its new member states in North Africa plus Jordan,
the EBRD expects 3 percent growth.
EBRD President Suma Chakrabarti told Reuters last week that
the bank's quarterly prognoses since around 2011 had pointed to
deteriorating economic conditions but now emerging Europe
appeared on the cusp of a growth pickup.
Eastern European economies were hit hard by the crisis in
the region which accounts for most of their trade and exports
and also suffered capital outflows as deleveraging Western banks
cut loans and funding to many local subsidiaries.
But the euro zone picture has brightened as a Greek default
has been averted and peripheral bond yields have eased thanks to
the European Central Bank's pledge to support struggling member
states in some circumstances.
The EBRD said cross-border deleveraging was continuing but
at a much slower pace and that funding conditions were less of a
problem for regional banks towards the end of 2012.
Exports, while lacklustre, no longer show an unequivocal
decline across the entire region, it noted.
It warned however that, with a few exceptions, it was yet to
see a consistent pickup in credit growth.
EBRD Chief economist Erik Berglof said: "It is too early to
sound the all-clear but there are signs of stabilisation."
POLAND WEIGHS ON CENTRAL EUROPE
The EBRD predicted that growth in Central Europe and the
Baltics, still vulnerable to euro zone shocks, will be a meagre
1.2 percent this year, downgrading it from an expected 1.7
percent as a slowdown in Poland weighed.
Poland was the only European Union country to escape
recession after the 2008 crisis but has of late suffered a
notable economic deceleration. Data on Friday showed industrial
output falling for the second straight month.
The EBRD trimmed its forecast for Poland's 2013 growth to
1.5 percent, down from October's 2.2 percent and compared to
last year's 2 percent expansion rate.
Turkey, which slowed last year from turbo-charged 8
percent-plus rates of 2011, is expected to grow at 3.7 percent
while Russian growth is expected at 3.5 percent.
The fastest-growing countries in the EBRD's area of
operations are Mongolia and Turkmenistan, both of which should
enjoy double-digit expansion due to new copper and energy
At the other end of the spectrum are Hungary and Slovenia
which are expected to remain in recession. Debt-ridden Hungary
contracted 1.5 percent last year and is not now expected to
achieve the previously forecast 0.4 percent growth.
The EBRD expanded last year into Egypt, Morocco, Tunisia and
Jordan. Recovery, especially in Egypt, is fragile, hindered by
political uncertainty, the EBRD said. But it revised up growth
forecasts for the four countries to 4 percent from a 3.8 percent
forecast in October. Growth was 2.9 percent last year.