* Czech economy seen growing "around 2 percent" in 2010
* Romanian c.banker sees economy growing 1.5 pct in 2010
* Turkey could grow up to 5 pct, IMF deal would give boost
* Serb cbank says sees more room for rate cuts
* IMF says western recovery make Hungary rate cuts possible
(Adds detail, background)
By Michael Winfrey and Gergely Szakacs
VIENNA, Jan 20 (Reuters) - Many of Europe's emerging
economies will outpace the more developed West this year and
improving global stability could open the way for lower interest
rates in those states still with room to spur growth.
Following a year in which almost every economy in central
and Eastern Europe contracted, with growth in worst-off Latvia
falling by almost a fifth, policymakers are now guardedly
optimistic in the light of improvements in some data from big
developed states.
European Central Bank Governing Council Member Ewald Nowotny
told an economic conference that while many policymakers had
taken a pessimistic view of the region at the height of the
economic crisis last year, that outlook had changed.
[]
"The way we see it now ... is that indeed also already in
2010, many of the countries in central and Eastern Europe will
have higher growth rates than in Western Europe," he said.
Poland, the only European Union member to avoid shrinking
during the crisis, is expected to lead the way out with growth
of more than 2 percent, while Romania should rebound from a
steep 7 percent contraction.
"For 2010 we are forecasting modest positive growth,"
Cristian Popa, deputy governor of Romania's central bank, told
reporters at a conference. "We see it around 1.5 percent."
Analysts and policymakers have also pointed to a potential
slowdown in the second half in countries dependent on exports to
the euro zone, like Hungary and the Czechs and Slovaks.
Those countries could see a potential slowing of new orders
due to still weak western European demand, rising unemployment,
continued tight credit, and an effort by some governments to
rein in huge fiscal gaps by cutting spending and raising taxes.
But Popa's Czech counterpart, Miroslav Singer, said his bank
would issue a forecast in two weeks that would reflect the
outlook of the big EU economies, following an estimated 4.4
percent Czech contraction in 2009.
"We can expect some upgrade in the growth prospect for this
year," he told Reuters Insider TV. "The gut feeling is that we
will stay in the vicinity of 2 percent."
RATE OUTLOOK
The EBRD development bank said on Tuesday that private
credit growth -- the main fuel for economies like Poland,
Romania and other states dependent on domestic demand instead of
exports -- was showing "green shoots" in some emerging states.
Turkey's central bank said recovery in the country of 71
million people on the EU's south-east border was under way
"slowly and gradually" and the economy could grow up to 5
percent in 2010 after dropping an estimated 6 percent in 2009.
Growth could receive a boost past the government's 3.5
percent mid-term estimate particularly if Ankara signs a deal
with the International Monetary Fund that could supply funds to
boost growth, central bank Governor Durmus Yilmaz told Reuters.
"Turkey agrees with the IMF, we are not going to agree for
crisis management purposes. We would agree to get funds to
enhance economic growth," he said. "Five percent growth is
within expectations."
Hungary's finance minister said on Tuesday his ministry
would raise its outlook for 2010 gross domestic product from its
initial forecast of 0.6 percent fall to a smaller contraction on
an expected improvement in exports.
But domestic demand in Hungary remains extremely weak after
spending cuts and wage cuts in the public sector last year.
The IMF representative in Hungary, Iryna Ivaschenko, said
the country remained sensitive to shifts in global sentiment but
further improvement could allow the central bank to continue in
an easing campaign that has cut the cost of borrowing by three
points to 6.5 percent.
"Should the global sentiment improve and stabilise further,
additional room for cautious rate cuts would appear," she said.
Hungary, Romania, and Serbia, all borrowers from the IMF,
have taken a careful approach to easing rates, fearing that
instability which sparked an asset sell-off in the region last
year could hit their currencies if they reduced their risk
premiums.
But that attitude is easing. Serbian central bank Governor
Radovan Jelasic said the Balkan EU hopeful could cut rates due
to a benign inflation outlook. He also stuck to the country's
economic outlook for 1.5 percent growth in 2010.
"There is definitely room to cut interest rates further, the
only question is the timing and the size," he said.
(Additional reporting by Sylvia Westall and Boris Groendahl;
writing by Michael Winfrey; editing by Stephen Nisbet)
