Fitch: GDP in Emerging Europe to plummet

Fitch Ratings said in a new report that Emerging Europe will suffer its steepest fall in real GDP since the collapse of the Communist planned economic system in the early 1990s, reflecting the severity of the trade and financial shocks that have hit the region.

However, the aggregate forecasts conceal a wide range in growth prospects across the region, the agency said.

Fitch forecasts GDP growth to contract by 3.1% this year in Emerging Europe: a severe and abrupt recession after growth of 4% in 2008 and an average of 6.8% in the five years to 2007, Fitch said. Moreover, it expects only a modest recovery of 1.4% in 2010, insufficient to prevent further rises in unemployment and pressure on public finances, the agency added.

The economies most exposed to the dramatic decline in global trade and financial flows and 'deleveraging' process are Hungary (rated BBB with negative view) and Kazakhstan (rated BBB- on Rating Watch negative), while Poland (rated A with stable view) and Turkey (rated BB- with stable view) are least exposed, albeit not immune, to these shocks, Fitch said.

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