East Europe will inevitably feel the effects of the crisis

The unimagined or still unknown risks directed towards the financial stability could prove to be as risky as the ones that are now under the economists’ supervision. The turbulences from the financial markets are converting in a serious difficulty for the economy of the countries from Central and East Europe, as for the ones from the former Soviet space.

That’s the conclusion of a study, that isn’t different from the rest of the prognosis regarding the evolution of this region: gradually, the rhythm of increase will reduce, as a result of the financial crises that spread all over the world. How powerful will be these effects, is still unknown, especially in case of more vulnerably economies.
Also, the experts don’t exclude the possibility that also the powerful economies to hide insidious risks, hidden deep in some companies, especially in banks. Two cases can confirm these fears: the unfortunate events from Societe Generale and the disaster from Northern Rock. „The countries from the east and central-European space will be fully affected. It’s inevitable”, considers Pradep Mitra, from the World Bank. „They will succeed to hold up, somehow. But some countries are more fragile to this kind of phenomenon, others more vigorous”, he explains.

A difference that is reflected on the financial markets. By revising their strategically projects, the investors try hard to stay far from risks.

Revaluation of risks

According the date from the European Bank for Reconstruction and Development, EBRD, the cost for financing in countries less advanced from the former URSS and Balkan, increased, starting last summer, with much more than in the states from the Central Europe. Erik Berglof, one of the experts of EBRD, considers that „takes place a revaluation of risks”.  

Besides, the cost of credits increases faster in the countries considered to be the most exposed to the extern storms. The Bank changed its previsions to the increase index of GDP for 2008, from 6,1 to 5-5,5%. Taking into account the unprecedented rhythm of the economical development mainly determined by the increase of the credit scale, this decrease can be greeted in the states that try to exceed the burden of inflation and which confront with a deficit of work force. In the first group were included Ukraine, Kazakhstan and Russia, in the second one Poland. In what regards the Baltic countries, EBRD sustains that despite of the fact that these countries show a higher deficit, their economy is less submitted to risks, than another. The protection comes from the additional measures of economic security valid once with the adhesion to EU.

Relaxation

Last year, the general attention was concentrated on the Baltic regions, situation determined by the high level of inflation, which touched, at the end of the year 14,1% in Lithuania, the leader of the European top. EBRD looks with concern towards Balkan, where Bulgaria displayed the highest deficit: of over 20% from the GDP in 2007.
In Romania, the EBRD experts say that the inflation is lower than the neighbors’, but the economists are worried by the fact that this country has a budgetary and taxation policy less rigid.

As the parliamentary elections are getting close, the EBR specialists don’t exclude an additional relaxation. Further to East, Russia and Kazakhstan rich in oil, have a great budgetary surplus, and also important state reserves for the protection of the financial institutions. But also there increase the reimbursement costs of the foreign credits, and the financial markets suffer as a result of the global turbulences.