* Q4 GDP revised down across central and eastern Europe
* Baltic economies contract by around 10 pct y/y
* Data point to deeper downturn this year
* Currencies rise on global sentiment, c.bank support
By Jan Lopatka
PRAGUE, March 11 (Reuters) - Central and eastern European
economies have entered a more severe downturn than was thought
just weeks ago as their key export markets in the west collapse
and domestic demand plunges, data showed on Wednesday.
Statisticians in the Czech Republic, Hungary, Bulgaria and
Estonia all slashed their original estimates of economic output
in the fourth quarter, showing recession was on the way in most
of a region now badly hit by the global financial crisis.
Latvia revised its GDP up marginally but still reported a
10.3 percent slump, a downturn that has led to a government
collapse and violent protests in the small Baltic country.
[]
The data varied from Latvia's double-digit contraction to
3.5 percent growth in Bulgaria, showing a vast gap within the
region, but all were headed for a poorer-than-expected 2009.
The region's currencies extended a rally despite the bleak
data, with the Czech crown breaking even year-to-date, as
markets drew support from globally better sentiment, absorbed
central bank intervention talk in Hungary and banked on a
possible bailout package for Romania. []
"There is nothing yet that would signify a turnaround in
this region, or abroad in fact. It is still too early to say
where the bottom is; we are not there yet," said Agata Urbanska,
an analyst at ING in London.
"Increasingly it is not differentiation between one economy
growing and another contracting; it's just differentiation
between how much economies are going to contract."
Poland remained optimistic on its performance this year,
with Finance Minister Jacek Rostowski predicting 1.7 to 3.7
percent growth, above analysts' estimates of 1.2 percent.
[]
The Czech economy shrunk by 0.9 percent in the final
quarter, compared with the previous three months, the worst
figure since 1997 and a deterioration from the originally
reported 0.6 percent drop. It eked out 0.7 percent year-on-year
growth. []
EURO HURT
The main culprit was exports, the key growth driver in past
years which evaporated as demand in Germany and other west
European markets plunged. Exports fell 24 percent year-on-year
in January, showing the economy continued to shrink.
Analysts said Czech output would suffer badly but the
country remained relatively well positioned to ride out the
recession without a meltdown thanks to low current account and
budget gaps -- which allows it to ease fiscal policy -- and
small exposure to the foreign debt that has crippled others.
Hungary, in contrast badly hit by a currency drop that has
inflated its banks' and households' mountain of foreign debt,
recorded a 1.2 percent quarterly drop, the third decline in a
row that put the annual decline at 2.3 percent.
The main cause, as in the Czech Republic, was weak exports
strangling the manufacturing sector. Analysts see the economy
shrinking by 3.6 percent this year. <HUGDP1>
Hungary has been eating through a $25 billion rescue loan
provided by the International Monetary Fund and the European
Union as it struggles to start selling its own debt again.
"The data point to a deeper recession setting in quicker
than expected," said Michal Dybula of BNP Paribas.
"Moving forward we expect the contraction in year-on-year
terms to deepen, driven by a combination of falling external and
domestic demand, the latter undermined by a tight policy mix."
TOTAL GLOOM IN BALTICS
Estonia, another small Baltic country badly hit by a halt in
credit flows, reported a 9.7 percent slump in fourth-quarter
gross domestic product year-on-year, led by a collapse of
household demand and investments.
Its central bank said it was leaning towards a bleak
scenario forecasting an 8.9 percent slump for all of 2009.
[]
Bulgaria revised its fourth-quarter year-on-year growth
marginally to 3.5 percent from 3.6 percent, versus 6.8 percent
the previous quarter.
Meanwhile, Romania reported an uptick in inflation to 6.9
percent in February, driven by a weaker leu currency, and
undermining the central bank's options to cut interest rates to
support the economy. []
(For more CEE coverage, click on <TOP/EAST>)
