Albania, Eastern Europe to experience a slow recovery says World Bank

TIRANA, Jan 20؅astern Europe’s economic recovery is likely to be muted as domestic demand stalls and foreign investment remains weak, the World Bank said.
The transition economies of the region will expand 1.3 % next year and 3.5 % in 2011 as higher unemployment, tax increases and lower wages curb private consumption from Albania to Ukraine, the Washington-based bank said in its Global Economic Prospects report today. Russia’s economy may expand 3.2 % this year, the best regional performance, the bank forecast.
“Given the region’s overleveraged private sector, weakness in the banking sector and household indebtedness, the recovery in domestic demand is expected to be muted,” the World Bank said in the report. “Foreign direct investment and credit inflows are expected to remain significantly lower than the levels observed before the crisis.”
Any recovery is expected to be “long, slow and marked by a rise in poverty,” the bank said. The region’s dependence on selling goods to its trading partners in Western Europe may restrain the expansion because the “projected weak recovery for developed Europe” will hold back export growth.
The World Bank says Poland probably grew 1.6 % last year and will expand 2.2 % this year. Latvia and Lithuania, suffering the deepest contractions in the European Union, will remain in recession in 2010. The biggest turnaround is expected in Ukraine, the bank said, with a projected 2.2 % expansion this year following an estimated 15 % contraction in 2009.
The 13 transition economies of central and Eastern Europe monitored by the World Bank don’t include the Czech Republic, Hungary or Estonia.