The European Bank for Reconstruction and Development (EBRD) has reduced its economic growth forecasts for 2009 as its region is subjected to the full impact of the global slowdown.
Despite this, the bank still expects the EBRD region – which includes 30 countries from central Europe to central Asia, including Turkey as of last year – to avoid a blanket recession of its own. However, average growth predictions marked some stark variations.
In November last year, the EBRD predicted a 2.5% growth in 2009, and estimated that the region had expanded by 6.3% in 2008. In its latest forecast, the bank has reduced its estimate of economic growth in 2008 to just 4.8% and expects average 2009 growth of 0.1%.
According to chief economist Erik Berglof, this adjustment comes as a result of the regions’ increased integration within the global economy. “The ability of these countries to withstand such a major external shock over the longer term will depend largely on the speed of the recovery of the global economy, the combined efforts of individual governments and international financial institutions, including the EBRD, to safeguard financial systems in the region, and the support of foreign banks to their eastern subsidiaries.”
The EBRD has announced that despite the lower short-term growth prospects, the mid to long-term expectations call for a rebound, possibly as early as next year.
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