EBRD says ex-Soviet bloc recovery to be 'protracted'

5th May 2010, Comments 0 comments

The European Bank for Reconstruction and Development said Wednesday that economic recovery in the former Soviet bloc would be "protracted" with "patchy" economic growth.

EBRD president Thomas Mirow will address the issue of recovery in a key speech at the London School of Economics later Wednesday.

"While the EBRD is now expecting return to growth in most countries of the region, the recovery period will be protracted, overall growth will be patchy and below pre-crisis levels for the foreseeable future," Mirow will say, according to extracts of the speech.

"The key drivers of pre-crisis growth such as foreign direct investment or household consumption will remain subdued and the future will bring much tougher competition for much scarcer sources of finance."

Mirow's address comes just before the bank's annual meeting which is being held in Zagreb, Croatia, on May 14-15.

Ahead of the meeting, the bank will unveil official economic growth forecasts next week for its investment zone, which comprises 29 nations including Azerbaijan, Moldova and Russia.

Mirow will also appeal later Wednesday for a new growth strategy to aid recovery in the ex-Soviet bloc.

"The bank will respond to lessons learnt from the financial crisis by addressing imbalances in economies that were unmasked over the last 18 months," Mirow will say.

The EBRD needs a "new growth agenda in order to prepare for sustainable economic growth in the longer term."

Mirow will add that the growth strategy will seek to address the mismatch between external and domestic sources of financing.

The bank also wants a "greater emphasis" on corporate-sector investments to help economies diversify.

The EBRD, which was formed in 1991 to help former communist nations in their transition to market economies, also invests in Mongolia, Tajikistan and Ukraine.

The bank usually invests in private enterprises together with commercial partners.

The global financial crisis ravaged economies in central and eastern Europe, largely because many of them were heavily reliant on foreign capital or high commodity prices.

© 2010 AFP

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