Feb 23 (Reuters) - Following are some details of how the
financial crisis is affecting eastern European countries inside
and outside of the European Union:
EU COUNTRIES:
BULGARIA -- Bulgaria's farming industry, once a main stay of
the economy, has shrunk to 5 percent of GDP from 25 percent in
the past decade. Cash-strapped producers suffered again in 2008
after the EU froze millions in farm aid over graft. The crisis
may erase Bulgaria's gains over the past decade because its main
export market, the EU has fallen into recession. Trade unions
say some 50,000 people are likely to lose their jobs in 2009.
CZECH REPUBLIC -- The economy is highly open and dependent
on exports, which in gross terms account for about 70 percent of
GDP. The financial system has been relatively unaffected by the
initial phase of the global financial crisis, but was hit from a
collapse in demand from key export markets. Over 45,000 people
lost their jobs in January, bringing the unemployment rate up
0.8 percentage points to 6.8 percent, the highest level since
April 2007. The government has said growth could contract by up
to 2 percent.
HUNGARY - Hungary, which escaped the crisis by way of a
$25.1 billion IMF-led loan in October, planned to cut its budget
deficit below 3 percent of GDP and decided on new spending cuts
worth 200 billion forints ($856.6 million) in 2009 to prevent an
overshoot. The economy is under pressure from a collapse in
demand in the euro zone, its key export market, and the economy
is expected to sink into a recession of up to 3.5 percent.
POLAND -- Economic growth slowed to 4.8 percent in 2008 from
6.7 percent in 2007. Poland is seen as more resilient due to its
large internal market and only around 40 percent of its economy
is based on exports. But industrial production fell almost 15
percent year-on-year in January and foreign direct investment is
expected to fall by as much as 40 percent in 2009, mirroring the
trend seen elsewhere in the region.
Poland's specific problem is currency weakness that has hit
companies with bad currency option bets, causing some to go
bankrupt, and raised the principle and payments of people with
foreign currency loans. The government expects growth of 1.7
percent in 2009.
ROMANIA -- Parliament approved Feb. 20 the 2009 budget
earmarking more than 10 billion euros ($12.60 billion) to lessen
the pain of sharp economic slowdown. Romania will also decide if
it needs to help from the EU or the IMF. Unemployment rose to
4.9 percent in January from 4.4 percent the previous month.
Several major industrial companies announced job cuts after
demand was hit.
SLOVAKIA -- Industrial output fell by 16.8 percent
year-on-year in December, the sharpest fall at least in 10
years. Slovakia expects its export-orientated economy to be hurt
by the crisis as demand for its products slows in the West.
Analysts in a Reuters poll forecast Slovakia would grow by 2.2
percent this year.
SLOVENIA - Forecast 2009 growth of around 1.1 percent,
downgraded from the previous forecast of 3.1 percent. It has so
far taken steps to subsidise companies which have shortened
working hours due to lower demand, eased the tax burden and made
available state guarantees for bank loans in a total amount of
12 billion euros ($15.37 billion).
NON-EU COUNTRIES:
RUSSIA -- Economy is set to contract in 2009 for the first
time in a decade. Around 300,000 Russians lost their jobs in
January after collapsing commodities prices and months of market
crisis. The number of jobless jumped to 6.1 million or 8.1
percent of the workforce versus 7.7 percent the previous month.
Russia forecast on Feb. 17 the economy would contract by 2.2
percent in 2009. Growth in retail sales slowed in January to 2.4
percent year on year from a 16.3 percent increase in Jan. 2008.
SERBIA -- Expects to conclude a 2 billion euro ($2.52
billion) loan with the IMF by April as growth is seen falling
short of earlier official estimates, Prime Minister Mirko said
on Feb. 20. Cvetkovic said it will most probably grow between
0.5 and 1 percent after the fall in fiscal revenues since the
beginning of 2009. By contrast, last week, Serbia's central bank
said the economy was most probably heading into recession.
Serbia's economy grew 5.5 percent in 2008.
UKRAINE -- Industrial output has shrunk by over a third --
the worst drop in over a decade. Machine building and mineral
production both contracted by over half year-on-year. Thousands
of workers have been put on unpaid leave as a consequence of the
drop. Ukraine's banks have also been hit as its hryvnia currency
plummeted, with three banks put in receivership last week,
including the seventh largest, the Nadra Bank.
-- Political turmoil has delayed policy making to combat the
crisis and has threatened a $16.4 billion loan from the
International Monetary Fund, which failed to agree last week on
disbursing a second, much-needed tranche.
