EBRD: May Transition Economies Forecasts
Overview:
The EBRD has released its May Transition Economies (TE) Forecasts. These are generally more positive than the interim update given in January. GDP growth in 2010 was better than expected and the outlook for 2011 has been upgraded. The mix of economic growth is also more sustainable: domestic demand is starting to recover removing the previous over-reliance on net exports. There are still significant divergences in performance amongst and within regions. Those that have large balance-sheet or fiscal imbalances to work out will continue to under-perform in the short-run. There also remain headwinds to the more positive growth story. Inflation is rising due to a jump in commodity prices. As a result monetary policy must be tightened even as fiscal consolidation continues. Financial market instability remains.