Eastern Europe

Regional Outlook for 2010 Continues to Improve

The global recovery is firmly entrenched. In the third quarter, virtually all major economies have emerged from recession. In the United States, growth rebounded fuelled by government incentives such as the 'cash for clunkers' program. Moreover, preliminary data suggest that the economy gathered speed in the fourth quarter, amid strong private consumption. The Euro area also returned to growth in the third quarter, led by a rebound in the region's leading economies, France, Germany and Italy. However, the gap between the Euro area's strong and weak economies widened in the final quarter of the year, indicating mixed developments for 2010. In Asia, China continues its rapid recovery whereas in Japan the revival process remains precariously dependent on support measures from the government. As the private sector shifts into recovery mode in most economies around the globe, governments and central banks are beginning to cautiously consider exiting the massive policy stimulus applied during the last year. Finding a balance between maintaining stimulus measures where necessary and withdrawing support where the danger of imbalances is building up will constitute the key challenge for policy makers this year. With the balance of the global outlook on the positive side, prospects for growth in Eastern Europe in 2010 are improving steadily, suggesting a sound improvement in the majority of the countries, after the abysmal performance recorded last year.