[size=55:2m2brril]novinite 18 September 2010

Tough Going for Crisis-Hit Bulgaria, Romania

East European growth rates will remain subdued in coming quarters as the recovery in the US and the euro region is losing steam, European Bank for Reconstruction and Development President Thomas Mirow said.

According to him Bulgaria and Romania are the Eastern European states, which have the most difficulties overcoming the effects of the crisis.

The London-based lender won't revise its 3.5% economic growth forecast for this year for the 30 east European and central Asian countries it invests in because the estimates "
have been rather modest,"
Mirow said in an interview for Bloomberg agency during a Vienna conference.

"
Growth rates will not be impressive"
as the slowdown in developed nations "
will have an impact on the region,"
Mirow said. "
We will not revise downwards and we won't revise up. We have been rather modest compared to the pre-crisis situation."


At the end of July the London-based European Bank for Reconstruction and Development modestly revised downward its forecast for the economies of east Europe to central Asia, citing risks arising from financial market volatility and the impact of fiscal tightening.

The EBRD's latest economic outlook has lowered its average growth forecasts for the region to 3.5% in 2010 from the 3.7% predicted in May, the bank said in a statement. The growth forecast for 2011 was also revised downward marginally to 3.9%.

On average the economies of south-eastern Europe are expected to contract by 1.5% this year, compared to 0.3% growth forecast in May. In the two EU members, Bulgaria and Romania, as well as Montenegro growth in 2010 is projected to be negative.

Bulgaria, the European Union's poorest country, is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investments dried up.

Earlier this year, the government adopted a package of austerity measures, freezing public pays and pensions in a bid to reduce the bloating deficit.

The consolidated budget deficit exceeded BGN 1.5 B in the first six months of 2010 due to a fall in revenues and a rise in spending for social payments.

The cabinet midterm fiscal policy plans envisage that Bulgaria will cut twice its fiscal shortfall to 2.5% of gross domestic product next year.

It revised up to 1% its economic growth forecast for this year, pinning its hopes on increasing exports.