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EBRD revises its forecast for emerging European economies

The European Bank for Reconstruction and Development (EBRD) has today reduced its forecast for GDP growth within the emerging European economies for 2010 and 2011. It would appear that austerity measures taken by various governments around Europe will have a major impact upon the short to medium term performance of economies and could indeed push some economies back into recession.

The EBRD has reduced GDP growth forecast for 2010 to 3.5% from 3.7% for emerging Europe and from 4% to 3.9% in 2011. The fact that the Hungarian authorities are currently in talks with the IMF is a further issue which will needs to be addressed in due course because the two parties have been unable to come to an agreement. The Hungarian economy is literally on the verge of collapse and if this was to happen we would see an increase in borrowing costs in European money markets which would further impact upon other emerge European economies and Europe as a whole.

Despite the fact that it would appear we were over the worst of the credit crunch, and the worldwide recession, many issues are starting to come to the surface and could cause significant problems in the short to medium term.

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