World Bank - The economy in Bulgaria with good chance of growth in 2009
Bulgaria was among six Central and Eastern European countries whose economies could grow in 2009, the World Bank said in a report.
“Forecasts are subject to very high degrees of uncertainty, mostly on the downside,” the bank said, but Bulgaria, the Czech Republic, Poland, Romania, Slovakia and Slovenia could each see up their economies expand by up to two per cent.
Hungary, however, would see its economy shrink by three per cent, while the Baltic states’ economies could contract by as much as five to seven per cent, according to the report.
A report by Citibank, quoted by Bulgarian-language daily Dnevnik, said that Bulgaria’s currency board would help the country weather the turbulence.
The currency board is stable enough to deal with the shocks, since it has enough buffers in the fiscal and currency reserves, the report said. Alternatives like currency devaluation or adopting the euro were not the best solutions, it said.
The region faced a dearth of international liquidity, exposure to vulnerable banks, and collapsing export markets. Policymakers’ options to deal with the crisis were limited due to monetary and budget constraints that also left little or no room for fiscal stimulus, Reuters reported.
Already the crisis has taken the first political casualty in Eastern Europe, as Latvia’s Prime Minister Ivars Godmanis resigned on February 22. The country agreed a 7.5 billion euro bail-out in 2008 and expects to be one of the worst hit by the crisis, with Godmanis’ cabinet forecasting the economy shrinking by 12 per cent in 2009.
With Western European members of the EU making no progress on any initiatives to prop up the economies of member states from the former communist states, forecasts like the one in the World Bank report could prove overly optimistic.
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