Turning the Corner in Eastern Europe
Many countries in Central and Eastern Europe were hit hard by the global financial crisis, owing to a massive build-up of debt - much of it in foreign currencies - during the boom years that preceded it. Sustainable recovery will require the development of strong local capital markets, as well as stronger institutional and regulatory frameworks – and not just at the national level.
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LONDON – There are various kinds of facts, the Russian satirist Mikhail Saltykov- Shchedrin once quipped: “There are convenient facts and inconvenient ones; and there are some that aren’t even facts.”
As we enter 2010, a convenient fact is that the world economy has stopped its dramatic decline and started to recover. An inconvenient fact is that the recovery remains fragile. And a non-fact is that the next 12 months will be smooth sailing. On the contrary, serious challenges remain, and they must be addressed with urgency.
The region covered by the European Bank for Reconstruction and Development – Central, Eastern and South-Eastern Europe, Russia, the Caucasus and Central Asia – has been hit particularly hard by the financial and economic crisis that began in 2008. Massive and determined state intervention (Russia and Kazakhstan), or unprecedented coordinated support by international financial institutions (Ukraine, Hungary, and Latvia), has been necessary to prevent even more dramatic falls.
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