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Economic Indicators Bulletin in Southeastern Europe - February 2014

  • The ongoing developments in Ukraine remain extremely volatile, as the country has split into two fronts - the first that is pro-European and is concentrated in Kiev and the second that is pro-Russian and is concentrated in the Crimea region. However, the domestic unrest that began in November last year has created turmoil in international relations. In recent weeks, the three major rating agencies downgraded Urkaine’s sovereign credit rating noting the increasing political uncertainty. A key challenge the country will have to face, apart from the socio-political turmoil is the debt service and the depreciation of the Ukrainian currency against the dollar.

  • On February 26th, the Bank of Albania (BoA) decided to cut the key policy rate by 25 basis points to the historically low level of 2.75%. The last rate cut, of 25 bps, was in December.

  • In its winter forecasts, the European Commission (EC) estimates that Bulgaria’s economy will further recover in 2014 by 1.7% – compared to 1.5% in the autumn forecasts – and 2.0% in 2015.

  • In its winter forecasts, the EC estimates that Cyprus’s economy will contract by 4.8% in 2014 – compared to 3.9% in the autumn forecasts – while in 2015 growth will gradually resume, reaching 0.9% as domestic demand recovers.

  • In its winter forecasts, the EC predicts that Romania’s economy will grow by 2.3% in 2014 – compared to 2.1% in the autumn forecasts – and by 2.5% in 2015, as domestic demand is estimated to increase its contribution to growth.

  • In its winter forecasts, the EC estimates that Serbia’s economy will grow by 1.3% in 2014 – compared to 1.5% in the autumn forecasts – and to 2.2% in 2015.

Ilias Lekkos

Chief Economist