(Corrects 1st paragraph to refer to "this year", not "next
year")
* EBRD sees emerging Europe GDP growing by 3.3 pct in 2010
* Polish, Russian, Turkish, Kazakh growth spur GDP revision
* Tighter fiscal policy, rising bad loans weigh
By Sebastian Tong
LONDON, Jan 22 (Reuters) - The economies of emerging Europe
will expand an average of 3.3 percent this year, faster than the
2.5-percent forecast in October, but the pace of growth will
vary across the region, the European Bank for Reconstruction and
Development (EBRD) said on Friday.
The development bank said the revision was driven by
stronger-than-anticipated economic performance of Poland,
Turkey, Russia and Kazakhstan, which have enjoyed a resumption
of capital inflows and stronger commodity prices.
"The recovery in the region remains fragile, with large
variations across countries. The gradual global recovery will
support regional growth, but local factors will dampen it," EBRD
Chief Economist Erik Berglof said in a statement.
Smaller economies that do not export commodities will
continue to see slow growth, the London-based lender said,
adding that it still expected economies in Hungary and the
Baltics to contract this year.
The EBRD also adjusted its 2009 estimate for the regional
economy to a 6.1-percent contraction, slightly smaller than the
6.3-percent decline seen in October.
The pace of recovery in the EBRD's 29 countries of
operations would pick up next year, with a likely average
expansion of 3.8 percent.
For a table on EBRD growth forecasts please click on
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The EBRD's figures come ahead of the International Monetary
Fund's release next Tuesday of its updated World Economic
Outlook.
FISCAL TIGHTENING
The EBRD said Russia's economy would grow 3.9 percent this
year after shrinking 8.7 percent in 2009.
Average growth in central Europe and the Baltics is seen at
a more sedate 1.4 percent while eastern Europe and the Caucasus
are predicted to grow 4 percent.
Poland, Slovakia and Slovenia are likely beneficiaries from
a rebound in euro zone growth while recovery in Romania will lag
due to domestic fiscal tightening.
Indeed, the EBRD expects curbs on government spending to
impact many economies in the region, offsetting the improvement
in external demand from Western Europe economies.
Unemployment is likely to rise, dampening domestic demand.
The bank also sees rising non-performing loans and cautious
lending policies continuing to constrain the willingness of
banks to extend credit.
"Appropriate public and private sector policies and actions
to clean up balance sheets, restructure debt and deal with
distressed assets will be important to help sustain credit
growth and support economic recovery," Berglof added.
The EBRD was set up at the end of the Cold War to help
former communist economies adjust to free markets.
s 60-odd country shareholders.
(Reporting by Sebastian Tong; )
