European Bank For Reconstruction And Development Sees Crisis Overflowing Into Russia, North Africa, And Eastern European Countries

Tuesday, July 24, 2012 23:20
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European Bank For Reconstruction And Development  Sees Crisis Overflowing Into Russia, North Africa, And Eastern European Countries

Tags: European crisis | global investing | world economy

The European Bank for Reconstruction and Development (EBRD) says that the European crisis is likely to spread to Russia because of its close trading relationships with seven southern economies in Europe. Lower commodity prices and a diminished appetite for risk by investors are the two main culprits cited in the forecast.

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The forecast also applies to other areas that depend on commodity exports, such as Morocco and other North African countries whose economies have been weakened by political uncertainty.
 
The European crisis is beginning to affect countries like Croatia, Hungary, and Slovenia, areas in which the Eurozone invests. Investment in such countries is already five percentage points below investment levels before 2009.
 
The EBRD’s purpose since its establishment in 1991 has been to aid Eastern European countries in transition from centrally planned economies to market based ones. It has done so through lending to and/or buying equity stakes in private companies. If that investment decreases, businesses in those countries will suffer, causing their economies to contract.

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