New Europe in deep recession

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Thursday, 05 March 2009 09:29

The problems faced by central and eastern European states as a result of the current financial and economic crisis will top the agenda of an informal EU summit, reports The Irish Times. “Concern is growing that the severe economic downturn in the region could prompt more public protests, further political instability and a need for additional financial bailouts,” says the newspaper.

“Hungary and Latvia have already been forced to go cap in hand to the International Monetary Fund (IMF), the World Bank and the EU to source emergency funds,” the report continues.

The newspaper says analysts are predicting that states such as Romania or Lithuania could be next in line for a bailout and the World Bank has asked western EU states to provide funds to help banks in the region. “Even a state with relatively sound finances, such as Poland, has seen its currency, the zloty, lose 28 per cent of its value against the euro since October. This is now crippling many homeowners in the region, who took out mortgages in foreign currencies such as the euro or the Swiss franc to avail of lower interest rates in better times.”

Unemployment is rising as international investment in the region dries up and export markets shrink in the downturn, The Irish Times concludes.