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2010. The economies in the region whereto?

Another turbulent year is closing. After a devastating 2009 for the economies of all countries in the region what interests us most now, as investors, is what will happen in 2010 and what evolution will have the economy of these countries in the year we're just about to enter.

The forecasts of the key financial and international institutions are not always in consensus and the estimations of the local governments are usually more optimistic than those of international institutions, mainly for elections PR reasons, so we will try to do a review as most complete as possible of these forecasts, including various points of view.

As average values, the contraction of the Eastern Europe economies in 2009 was estimated by BERD to 6.3%, respectively as by the estimations of the same international body, in 2010 we can expect an average increase of 2.5% of the Eastern European economies.

But let's analyze what happened to some of the region's economies in 2009 and what should we expect in 2010.


In 2009 the Bulgarian economy decreased by 6%, an average level compared with other countries in the region. The forecasts for 2010 are different depending on the institution that issues them, varying between a decrease of 2% in the estimations of the Minister of Finance, 2.5% according to IMF and an increase of 0.5% according to Central Bank. But Bulgarian authorities are optimistic for 2010 based on Germany's economic recovery and the fact that the economic relations between Bulgaria and Germany are very strong, the trade balance of Bulgaria being strongly influenced by the trends of the German market.


In 2009 the economic decline in Serbia was only of 4%, so it is situated under the average of the countries in the region due the fact that the Serbian economy is still not so connected to the global system and also because Serbia is a deeply emerging economy with great potential of development.

For Serbia, all forecasts for 2010 are optimistic. The most reserved prognosis come from IMF, which estimates a zero growth. Ministry of Economy is more optimistic expecting a 1% growth, while the EBRD expects a 1.5% growth.


Romania's economic decline in 2009 exceeded the decline of the neighboring countries in particular due to governmental incoherence and werong economic measures taken by the Romanian Government in full crisis. Thus, the decline of the economy was one of the biggest in the region, with 8%. Projections for 2010 are different depending on the institution, varying between a decrease of 0.5% according to Capital Economics, and increases of 0.5% according to European Commission, between 0.5 - 1% according to IMF and 1% according to the EBRD.

I personally believe that a decisive factor in the evolution of Romania's economy is the presidential election this autumn and the structure tof the new governmentthat will be formed. If Romania will continue with the same lack of vision and economic coherence as in 2009 and if it will not be reached a stable Government, unfortunately 2010 will mean for Romania another year of economic decline, losing the advantage the country had in the last years compared with other countries in the region.


Hungary also registered in 2009 a medium-high decrease of 6.5%. The forecasts for 2010 are still not very optimistic, Hungary not having the strength to recover so quickly after the crisis. The most of the forecast institutions have reserved estimations regarding Hungary, starting from a zero growth according to local research institutes, and continuing with a common view of IMF, EBRD and the Hungarian Government which estimate a decrease of 0.9% in 2010. The most pessimistic view belongs to OECD which estimates a decrease of 2.2%. for the Hungarian economy in 2010.


Moldova's fragile economy was hardly hit in 2009. The economic crisis combined with the political crisis which lasted for several months, brought the Moldavian economy to a decrease of 8.5% in 2009. However, the prospects for 2010 appear to be optimistic. Moldova is a young state but with potential, especially because of the position and strategic advantages that offers in the region. Thus, although IMF is reserved and forecast a zero economic growth for 2010, the Ministry of Economy is more optimistic, relying on an economic growth of 1% while EBRD is the most optimistic, estimating for Moldova an economic growth of 1, 5% in 2010. This trend is however heavily influenced by the ability of the politicians from Chisinau to achieve a political and a governmental stability and also the capacity of the new government to implement the pro-European measures which brought them the decisive electoral capital during the elections of this year .


Neither Russia had an easy life in 2009. The crisis has strongly hit Russia's economy, an emerging economy, still unstable and institutionally incompletelly reformed. Even if in 2009 Russia had an economic loss of 7.5%, still it has the ability to recover in 2010 according to most experts. Thus IMF credit Russia with a growth of 1.5% for the next year, while EBRD forecasts are more optimistic, relying on an economic growth of 3.1% in 2010.


The country from the region with the worst loss due to this crisis seems to be Ukraine. Also in the Ukraine's case the economic crisis came together with the political crisis, respectivelly the absence of structural reforms essential to a normal functioning of the state led to a major crisis. Thus, in 2009 Ukraine had an economic loss of 14%. Despite the dramatic situation, Ukraine seems to have reached the minimum crisis point, due to the fact that expert's estimations for the next year are optimistic. The Ukrainian Government is forecasting a 1% growth in 2010, while international experts are more confident, forecasting an increase of 2.5% according to IMF and 3% according to the EBRD. In Ukraine, as in Romania, these indicators will be influenced by the elections of this autumn and by the economic policy that both countries will adopt after the elections.

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