Page 19 - bne IntelliNews Country Report: Russia Dec17

2.8 Almost all of the EBRD countries booming
Higher exports and rising levels of investment on the back of improving commodity prices have prompted the European Bank for Reconstruction and Development (EBRD) to significantly increase its forecasts for economic growth in Emerging Europe. The bank made its case for the revised forecasting in its latest Regional Economic Prospects report released on November 6 .
Countries across the entire EBRD region, with two exceptions, are enjoying broad-based growth and rising income levels. Several countries where the development bank is active are also experiencing record low unemployment. The negatives in the picture are minimal and are mainly caused by economies running up against structural constraints. Rising inflation is, however, a growing concern in some locations.
Average growth across the EBRD region will be 3.3% this year, the development bank forecast. That equates to a rise of 0.9 percentage points over the previous estimate from the bank that was issued in May at the time of the bank’s annual meeting. Growth in 2016 only reached 1.9%.
The EBRD tracks the economies of 37 emerging countries, where it finances projects and supports reforms that promote sustainable and environmentally-friendly market economies.
Emerging Europe is booming as the bne IntelliNews magazine reported in this month’s cover story. “The pace of growth has picked up in 27 of the EBRD’s economies this year, the first time that such a broad upturn has been seen since 2010,” the bank said in a press release.
The growth is mixed with Central Europe being the star performer – Czechia and Romania are the outstanding examples, but even the laggard Eastern Europe is seeing many countries like Russia and Belarus put in better than expected results. All economies in the EBRD space, except Azerbaijan and FYR Macedonia, saw positive growth in the first half of the year.
Several countries, notably Romania and Turkey, are enjoying growth rates comparable to the pre-financial crisis levels of the mid-2000s.
The EBRD’s chief economist, Sergei Guriev, said: “The broad-based recovery is a very welcome development. It also creates a window of opportunity to carry out reforms that will ensure the sustainability of the stronger growth rates over the longer term.”
Unfortunately, it is usually exactly the time when it becomes easier to make reforms that governments feel the least need to make them. While the economics of most of the CEE countries have improved, the politics in many of the same countries have gotten worse. Romania, Czechia Ukraine and Russia are all cooling on the idea of putting deep structural reforms in place and the rise of nationalist politics in regions like Southeast Europe are distracting politicians, who have in many cases preferred to push illiberal agendas. Poland, Belarus, Hungary and more recently Romania and Czechia have all seen large anti-establishment parties or radicals returned in elections in the past few months. Czechia is the latest example, with the ascendance of the
19 RUSSIA Country Report December 2017 www.intellinews.com