South-eastern Europe: lessons learned from the global economic crisis in 2008–10

Abstract

This paper shows how the crisis has evolved in south-eastern Europe (SEE) and why this region was affected by developments that originated elsewhere. It argues that the impact has been better than many feared and that this resilience can be attributed in large part to the mature and sensible reaction of the region itself. However, the paper notes that recovery is proceeding more slowly than elsewhere in the transition region. It also points to the strong financial support from publicly owned international organizations, and the continued commitment of privately owned foreign companies and banks to the region. The paper concludes that the region is well-placed to take advantage of a future global upturn, but at growth rates that are likely to be subdued compared with those seen in the few years before the crisis.

Keywords:

• South-eastern Europe
• global economic crisis

Acknowledgement

I am grateful to Simone Zeh for her excellent research assistance, and to Marko Atanasovsky, Jens Bastian, Ivo Germann, Franziska Ohnsorge, Max Watson and Jeromin Zettelmeyer for comments and suggestions. This paper revises and updates an earlier version published in February 2010 as EBRD Working Paper No. 113 and subsequently as Chapter 1 of: From Crisis to Recovery: Sustainable Growth in South East Europe (edited by O. Anastasakis, J. Bastian and M. Watson), SEESOX, University of Oxford, 2011. The views presented here are those of the author and not necessarily of the EBRD.

Notes

1. In this paper, the term ‘south-eastern Europe’ is generally used, rather than the ‘Balkans’, to refer to the countries of former Yugoslavia (excluding Slovenia), Albania, Bulgaria and Romania.

2. See, for example, the IMF’s latest forecasts from the April 2011 World Economic Outlook. The growth forecast for south-eastern Europe in 2011 range from 1.2% in Croatia to 3.3% in Albania.

3. Monthly data on industrial production are not available in Albania.

4. Only ‘rough and ready’ estimates are available for several countries, including Bosnia and Herzegovina and Montenegro.

5. Monthly data on exports from Montenegro are not available.

6. An EBRD loan to the deposit insurance agency in Bosnia and Herzegovina, signed in January 2010, should enable the level of coverage to be raised to around €25,000.

7. A new round of the Life in Transition Survey was carried out in 2010. The EBRD will publish a report in June 2011 that summarises and analyses the main results from the second round.

8. The role of ‘external anchors’ in mitigating the effects of the crisis is analysed more fully in Bastian (2011).