IMF: Eastern Europe Poised for Economic Recovery - Report

An IMF monitoring mission visited Bulgaria as early as February 2010 to prepare the annual report on the Bulgarian economy. Photo by BGNES

The IMF stated Eastern Europe is poised for economic recovery for the first time since the beginning of the financial crisis.

Previous forecasts of the International Monetary Fund (IMF) were for slower and lesser rebounding in Eastern Europe compared to other developing economies in the world, the Bulgarian National Radio, BNR, reports, citing Deutshe Welle.

IMF sees as a sign of recovery the increasing export and the stabilization of the internal demand, and expects an economic growth of 3.3% in the region in 2010.

The beginning rebounding, however, does not mean Eastern Europe can come back to the economy levels from before the crisis, according to the report. Further growth would depend on the business, not on internal demand, because the latter will remain low over indebted consumers and lack of new loans – a trend that will force economies in the region to restructure, recover from the crisis and achieve a stable growth in the future.

IMF experts forecast the shrunken influx of foreign capital to Eastern Europe will remain at current levels permanently and, even if Western banks manage to rebalance their capital, the region would no longer be attractive over the risks that emerged during the crisis.

IMF recommends balanced macro-economic policies and restrictions of wage increases in the public sector, redirecting efforts to the manufacturing of better quality goods, instead of maintaining competitiveness only through cheap labor.

Recovery and growth ask for better education, better business climate, and in some countries, such as Bulgaria – fight against corruption, according to the report, cited by BNR.

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