Wednesday, October 19, 2011

EBRD: Euro crisis to smother growth in Serbia

BRUSSELS - The current troubles in the eurozone are slowing down growth in eastern European countries, particularly Romania, Albania and Serbia, according to a study by the European Bank of Reconstruction and Development (EBRD) published on Wednesday by the internet portal EUobserver.

Romania, Serbia and Albania are hit primarily due to exposure to Greek banks, which are an important part of the countries' financial sector. Because of that, the expected growth in the three countries for 2012 amounts to only a little over one percent, EBRD claims.

Although EU prepared another aid package for Greek banks, any help to eurozone banks would not go to the subsidiaries in the non-euro region, which will negatively affect the economic growth.

Until the resolution of the eurozone crisis, a period of continued market instability, constrained credit as well as the resulting near standstill in Western Europe is expected to seriously affect the outlook for the eastern European region, the study concludes.

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