13.8.09

Recession will continue damaging Eastern Europe in autumn


When financial crisis existed as a theory in West there was saying that if US will have flu then Europe contracts pneumonia and Eastern Europe maybe even cancer. Maybe it is exaggeration but it still there is no end of crisis in Eastern Europe. People are glad of the end of recession in Western Europe forgetting that we are different world. 

The most often opinion on the end of recession in Eastern being repeated by experts is "it will take time". In most extreme cases 
there are prognosis of recovery estimated as late as 2011
Economists are warning against waves of unemployment, which Western, rich economy can easier dealt with than post-communist economies. The truth is that most of post Soviets states were meant to be huge warehouses and production is on minimum level and R&D sector is almost undeveloped. 

I wonder whether anybody in Polish government listen to warnings of responsible economists and watches developments in Eastern Europe. It seems like Poles are not being told truth. 

After strong warnings he gave not president of EBRD is concerned about premature optimism in Eastern Europe (in Poland special minister Boni announced the end of crisis):

The economic crisis in eastern Europe remains a threat and the region will not return to very high growth levels soon, European Bank for Reconstruction and Development President Thomas Mirow said.

A German newspaper quoted Mirow on Wednesday as saying that he expected Asia and the United States to emerge from the economic turmoil first. Central and eastern Europe, which has been laid low by a credit crunch and collapse in Western demand, would lag, he said. (...)

Mirow told Handelsblatt that it was too soon to think that the region had turned the page, particularly as loan defaults would rise with increased company bankruptcies, which would in turn drive unemployment higher.

'I caution against premature optimism, given the crisis in the real economy. We must prepare ourselves for the fact that the really big challenges are yet to come,' he said in a transcript of an interview published on Handelsblatt's web page. 'By all means we cannot act as if the crisis is already over in eastern Europe.'

It can not be different situation, if there is great fear of huge wave of unemployment (even 10 percent next year) starting this autumn in Czech Republic. One big steel producer which owns also its plant in Poland may close Czech plant down. 

In rest of Eastern Europe (Slovakia, Hungary, Romania, Lithuania, Latvia)  recession is deepening:

Recessions in the former communist economies left their governments struggling to live up to European Union budget rules as rising unemployment drains public funds and depletes tax revenue. For Romania and Hungary, agreements on international bailouts are at risk, while Slovakia, the only euro region member, was warned by the European Commission for exceeding the bloc’s 3 percent budget gap limit.

(...)

We expect the eastern European economic decline to slow in the second half of the year,” Zoltan Torok, an economist at Raiffeisen International Bank-Holding AG in Budapest, said in a phone interview today.

(...)

Even so, eastern European government efforts to keep budgets in check, as rising unemployment drains fundswill hinder a recovery next year, said economists including Nicolaie Alexandru-Chidesciuc, chief analyst at ING Bank Romania in Bucharest.


One of results of that crisis is growth of enmity among people. It started from most vulnerable - people from abroad. They are being overused, abused and even raped. Here is example from Czech Republic but it may happen easily somewhere else. People do not speak because they are afraid to be thrown out of West to their poor home countries. 

Ronald Reagan Quotes