Muted FDI and Consumption To Slow Economic Recovery in SEE

TIRANA, May 5ؔhe European Bank for Reconstruction and Development (EBRD) said on Wednesday it expects most countries in emerging Europe to return to a patchy growth, but muted foreign direct investment and household consumption will slow down the recovery.
“The key drivers of pre-crisis growth such as foreign direct investment or household consumption will remain subdued and the future will bring much tougher competition for much scarcer sources of finance,” EBRD President Thomas Mirow said in a speech prepared for delivery at the London School of Economics on Wednesday evening.
The text of the speech on a New Growth Agenda for Emerging Europe was released in advance by the EBRD press office earlier in the day.
Mirow also said that developing local currency markets could help overcome a dependency on foreign currency debt and encourage more reliance on domestic savings.
“Higher corporate investments will widen the scope of countries’ offer of products, away from an over dependence on raw materials or a limited number of individual product groups,” Mirow said.
“Infrastructure investments will also continue and there will be a strong focus on energy efficiency and energy security projects. A priority will be set for investments in the Western Balkans and the less advanced countries of the Caucasus and Central Asia,” he added.
“Investments in Turkey are also set to rise over the next five years.”
In order to finance increased investments in the region, EBRD will proposetoits board of governors to increase the bank’s capital by 50%, which will unlock additional funds between 8.5 billion euro ($11 billion)and 9.0 billion euro a year between 2011 and 2015.
EBRD added it is well on track to achieve investments of around 8.0 billion euro for 2010, following funding of 1.76 billion euro in the first quarter of this year, a rise of 60% on the year.