Hungary and the Baltic states are set to face a more prolonged downturn in economic growth, the World Bank said in a report on the European Union's 10 eastern members.
At the same time a moderate slowdown is expected in countries including Poland, the largest of the EU's easterners, and neighboring Czech Republic.
Eastern European nations that have delayed unpopular economic reforms will suffer the most in the former communist region from the global financial crisis, Bloomberg mediates the World Bank.
"The global slowdown will put economic fundamentals at test and will penalize the slow reformers of the past the most,'' the World Bank said. "The time of low borrowing costs, high foreign investment, rising tax revenue and higher living standards will now have to be replaced by some painful decisions to reform public finances.''
According to the World Bank the EU's 10 eastern states Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Estonia, Latvia, Lithuania, Bulgaria and Romania will not be directly affected by the
crisis that was triggered by the collapse of the U.S. subprime mortgage market.
"The direct impact on the EU10's financial systems through exposure to `toxic' securities appears to be nil,'' the bank said, adding though that the full impact of the financial turbulence on the countries is yet to be realized, Bloomberg reports.
(Kaja Koovit, Äripäev 30.10.2008, Baltic Business News)
World Bank: Baltic States to face more prolonged downturn