The European Bank for Reconstruction and Development (EBRD) yesterday cut its forecast for its operating region. The bank said the ongoing impact of Europe’s sovereign debt problems is to blame. However, Turkey stood out as one of the few countries whose forecasts were raised, instead of being downgraded.
“The EBRD is predicting a slowdown in emerging Europe’s economic growth next year with the continuing eurozone sovereign debt crisis posing challenges to recovery from the 2008/09 global financial crisis,” Agence France-Presse quoted the EBRD as saying in a statement. “Increased stress in the eurozone could have an even more severe impact on emerging Europe this time around.”
The London-based EBRD has lowered its 2011 gross domestic product (GDP) growth forecast for its zone of operations to 4.5 percent, from a July estimate of 4.8 percent.
The 2011 gross domestic product (GDP) growth estimate for Turkey was raised to 7.5 percent, from a July estimate of 7 percent. The bank, however, estimates a 2012 GDP growth of 2.5 percent for Turkey, sharply down from its July estimate of 4.5 percent.
“Turkey’s economy continues to show signs of overheating,” said the report. “The economy grew by more than 10 per cent in the first half of the year, but signs of a cooling-off are now apparent, and the economy is likely to slow down sharply in 2012 due to a downturn of external demand and declining capital inflows.”
EBRD’s 2011 growth forecasts for Central Europe plus the Baltic States and Southeastern Europe stand at 3.1 and 1.7 percent, respectively. The estimate for Eastern Europe and the Caucasus stands at 3.8 percent, while the estimate for Russian GDP growth is at 4 percent.
The EBRD, which tends to invest in private enterprises together with commercial partners, operates in 29 countries from central Europe to central Asia. It currently plans to expand into the Middle East and North Africa region and wants to start investing in the area next year. It is owned by 61 governments as well as the European Commission and the European Investment Bank.