PRAGUE, April 24 (Reuters) - The International Monetary Fund
slashed forecasts for the European Union's eastern members this
week to predict double-digit recessions in the Baltic states and
at the very least growth contractions in every country.
But most striking was that some states seen as less exposed
to the global crisis since last year -- such as the Czech
Republic -- leapfrogged others such as Hungary to register worse
predictions, contrary to the view of mainstream markets.
The figures were released in the IMF's World Economic
Outlook on Wednesday.
Poland, the region's largest economy, was seen as the best
performer. The IMF said it would contract by 0.7 percent, a
prediction that drew criticism from Poland, which says growth of
1.7 percent this year is a worst case scenario [].
The IMF said economic activity had hit a pothole in emerging
Europe since capital inflows that boosted strong growth most of
this decade dried up due to a slowdown in developed countries.
Shrinking Western export markets made that worse and Latvia,
Lithuania, and Estonia would suffer particularly hard, falling
by at least 10 percent each over 2008 levels.
"The downside risks around the projections for both advanced
and emerging economies are large, particularly for the latter,
where external financial constraints could worsen further," the
IMF said.
Its prediction of -3.5 percent growth for the Czech Republic
was worse than the government's forecast of a 2.3 percent fall.
The Fund's expectation of a 3.3 percent drop in Hungary was
more rosy than that government's outlook of a 6 percent drop.
Both countries have suffered a collapse in output by around
a quarter due to the severe economic downturn in Germany.
The IMF said the biggest risk to emerging EU growth was a
"disorderly deleveraging" from the region by cross-border
European banks -- i.e. a Western-owned parent bank suddenly
stopping financing to its unit or customers in an eastern EU
state.
IMF GROWTH FORECASTS:
2007 2008 2009 pvs* 2010
BALTICS
Estonia 6.3 -3.6 -10.0 (0.5) -1.0
Latvia 10.0 -4.6 -12.0 (-2.2) -2.0
Lithuania 8.9 3.0 -10.0 (0.7) -3.0
CENTRAL EUROPE
Hungary 1.1 0.6 -3.3 (2.3) -0.4
Poland 6.7 4.8 -0.7 (3.8) 1.3
Czech Republic 6.0 3.2 -3.5 (3.4) 0.1
Slovakia 10.4 6.4 -2.1 (5.6) 1.9
BALKANS
Bulgaria 6.2 6.0 -2.0 (4.2) -1.0
Romania 6.2 7.1 -4.1 (4.8) 0.0
* Forecasts made in IMF's last World Economic Outlook in
October, 2008).
NOTE: The forecasts by the IMF in the World Economic Outlook
do not always match the latest forecasts given by the Fund for
particular countries.
(Reporting by Michael Winfrey; Editing by Ruth Pitchford)
