Eastern Europe Recovery To Remain Sluggish This Year: EBRD

Economic recovery in Eastern European countries will likely remain weak in 2014, despite improvements in the world’s most advanced economies, the European Bank for Reconstruction and Development (EBRD) said Tuesday.

In its latest Regional Economics Prospects report, the EBRD said that emerging economies are still suffering from capital outflows that will likely persist in light of the expected gradual tightening of US monetary policy.

EBRD forecasts a 2.7 percent growth for the transition region this year, which is slightly lower than the 2.8 percent growth projected in October. It urged the governments of these countries to resume structural reforms and tackle the economic crisis for sustained recovery to take hold.

The bank lowered Turkey’s growth forecast for this year to 3.3 percent from the earlier projection of 3.6 percent, citing monetary tightening and an increase in financing costs.

“How countries react with policy changes now will determine how their economies respond to further bank deleveraging and adjustments to U.S. monetary policy,” EBRD Chief Economist Erik Berglof said.

The bank said it expects only a gradual improvement in external factors affecting the transition region, with a slow and uneven recovery in the Eurozone and a general deceleration in larger emerging markets partly offset by the stronger outlook in the United States and Japan.

Russia’s economic growth is set to accelerate to 2.5 percent this year from 1.3 percent in 2013. At the same time, Ukraine is seen posting a small growth after contracting moderately in 2013.

The material has been provided by InstaForex Company – www.instaforex.com

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