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E X C H A N G E: The Magazine for International Business and Diplomacy


EBRD examines business opportunities in South East Europe Exclusive interview with Jean-Marc Peterschmitt, Managing Director, Central and South Eastern Europe, European Bank for Reconstruction and Development

Photo by Besim Gerguri

Exchange: South Eastern Europe (SEE) is steadily transforming itself from a statecontrolled economy into an emerging market with strong growth potential. But, as was the case with many other regions across the globe, the Western Balkans was also hit by the financial crisis, although the impact wasn’t as bad as many feared. This resilience is largely attributed to the considered reaction of the region itself. According to your Bank’s (EBRD) Transition Report 2010, the recovery in most SEE countries is progressing slowly, with growth projections in most countries between 1 and 3 per cent. However, the expansion of the recent debt crisis from Greece to Italy, Europe’s fourth-largest economy, could potentially stall the re16

gion’s recovery. To what extent could this debt crisis affect the recovery in SEE in general, and the Western Balkans in particular? Did the financial crisis have an impact on the banking sector in SEE? J-M.P. We expect positive growth rates for all SEE countries in 2011, between 1.1 and 3.3 per cent, mostly in light of a strong performance in the external sector. However, it is important to emphasise up front that these forecasts are subject to a lot of uncertainty, with some clear downside risks. The EBRD’s Office of Chief Economist will issue revised forecasts for 2011 and 2012 in mid-October. So far the feared spill over effects have been largely contained. However, as the debt crisis con-

tinues to unfold and economic performance of the Euro zone weakens, negative contagion effects are likely. The SEE region enjoys close links to the EU, mostly in the form of trade. Indeed, investments and remittances, but also through financial intermediation, as many banks in the region are part of larger European groups. Concerning trade, the EU remains the main trading partner of the SEE, with an average of above 60 per cent of exports from the region going to the EU internal market. In particular Albania is heavily dependent on trading with neighbouring Greece and Italy, whilst much of the remaining SEE countries are mostly dependent on trade with the core Euro zone members.

Exchange Autumn isuue 2011  

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