Emerging Europe Growth to Drop 2012 on Euro Crisis -World Bank
First Published Wednesday, 27th June 2012 09:45 am - © 2012 Dow Jones
By Veronika Gulyas
BUDAPEST--Economic growth in the 11 countries of Emerging Europe is set to slow this year compared with 2011 amid an escalated sovereign-debt crisis in the euro zone, the World Bank said in a report Wednesday.
"Albeit at a decelerating pace, the EU11 economy is expected to expand in 2012--provided there is no further deepening of the crisis in the Euro area," the World Bank said.
The body now expects to see average economic growth in the emerging European universe at 1.5% this year, versus 3.1% last year, driven by private consumption, investment and net exports.
The report focused on the European Union's 10 newly-joined World Bank members: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, and Slovenia as well as planned joiner Croatia. It noted economic prospects for this year have been downgraded amid new risks such as a worse-than-expected slowdown in economic activity in the EU15, where most exports from Emerging European are directed.
Among them, highest-growth countries include Poland, Lithuania and Latvia with expansion forecast at a respective 2.9%, 2.3% and 2.3%. Gross domestic product contraction is expected in Slovenia, Croatia and Hungary.
The World Bank partly attributes the slowdown in part to hasty and heavy-handed attempts to solve the debt crisis, increased uncertainty and volatility in financial markets which undermined the confidence of both investors and households. It also noted that declines in public consumption--due to continuing austerity measures--will remain a drag on economic performance.
The bank forecasts a rebound in 2013, projecting average growth in the EU11 at 2.5%, mainly based on a projected global economic upsurge. The report sees no EU11 country in recession next year and expects to see the biggest growth in Lithuania at 3.5%.
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