Page 3 - bne IntelliNews Georgia country report November 2017

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November 11, 2017 www.intellinews.com I Page 3
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 Ano movement which won with a landslide in the general election.
Growth across the region is expected to continue into 2018, but at a slightly more moderate pace
of 3.0%, the EBRD said. Despite the recent acceleration in economic output, the EBRD expects average growth in to remain slightly below that of other comparable emerging markets.
The bank also offered a cautionary note in saying that despite the good news, the ongoing growth story remains subject to many risks, including geopolitical tensions, persistent security threats, the growing appeal of populist anti-globalisation policies in advanced economies and a high degree of concentration in the sources of global growth.
Inflation is largely on track to meet central bank targets and in Russia’s case has already long passed the 4% the Central Bank of Russia (CBR) was aiming for; in November inflation fell to a record 2.7%. However, inflation is a problem else- where. In the Baltics, Azerbaijan, Egypt, Turkey
and Ukraine inflation rates are in the double digits, reflecting earlier depreciations of the respective currencies. Similarly, inflation is expected to rise
in Uzbekistan (a reforming country the EBRD is re- turning to after a long absence) where the Central Bank raised its policy rate by five percentage points following an exchange rate liberalisation.
In about two-thirds of the countries where the EBRD is present, the ratios of non-performing loans (NPLs) peaked in the double digits after
the 2008-09 global financial crisis. In half of the economies, the NPL ratios peaked at levels close to or above 20%. In most countries, NPL ratios continued rising for several years after the cri-
sis before peaking and starting to decline. A few exceptions include the Baltic States where NPLs peaked early and by now have declined to levels around or below 5%. In contrast, in several econo- mies in Eastern Europe and the Caucasus and Central Asia, NPL ratios are yet to start declining. The declines in NPL ratios from their peaks have