Eastern Europe is in for economic turmoil

This conclusion was reached by specialists of the international monetary fund. Symptoms are similar to the Asian crisis that erupted 10 years ago and led to default in Russia.

Next year, a large-scale economic crisis threatens Eastern Europe. Especially vulnerable are Ukraine and the Baltic countries, according to the IMF. The main symptoms of future difficulties are current account deficits and growing private sector debt. Behind them is the crisis of non-payments. This happened 10 years ago in Asia. However, now the level of investor confidence is much higher.

Ukrainian experts associate market stability with political stability. In order to prevent a recession in the country, authorities should be formed and work started, the deputy of the Verkhovna Rada of Ukraine Mikhail Chechetov said: “If the formation of state power is completed, the risks of a crisis will decrease. The government must move away from the ideology of populism and pursue a policy within the framework of tough financial pragmatism “

However, if a crisis arises in Eastern Europe, then Ukraine will feel its consequences. Much will depend on how real European states will fight inflation, says Vladimir Levchenko, asset manager of the investment group AJ Capital, “Eastern Europe will not begin to fall by itself, the avalanche of non-payments will not go there by itself. “raise interest rates. And this can be done by the Chinese and Japanese. I am inclined to a deflationary scenario for the development of this crisis, which will be expressed in the tightening of monetary policy in China and Japan and the strong growth of the Japanese yen.”

The IMF has already lowered its forecast for the economic development of the eurozone next year. Growth may be about 2%. European Commission experts are a little more optimistic. According to their estimates, this indicator will stop at around 2.2% – half a percent lower than the result of this year. The decrease in the outlook is due to the negative consequences of the crisis in global financial markets, as well as to expectations of rising oil prices. The cost of raw materials on exchanges next year may exceed $ 115 per barrel.

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