the length of the downturn. Emerging Europe has been particularly hard by the drop in capital inflows. In recent months the pace of contraction has slowed dramatically in much the region, with risk appetite returning, exports accelerating, and the inventory drawdown moderating although private credit remains sluggish and unemployment is on the rise. In emerging Europe financial institutions are vulnerable to a further deterioration in asset quality; because losses In the corporate sector may rise while capitalisation remains fairly low. The recourse to shortened work hours in effort to preserve jobs may have slowed the fall in employment so far, but as labour market pressures continue In the months ahead and as employment support programs reach their limits. Unemployment is forecast to remain high. As credit conditions remain tight, investment will likely remain low. At the same time inflation is at low levels and private demand is likely to remain particularly subdued in many European countries. Service and product market reforms are needed to raise productivity growth and facilitate a reallocation of resources between the tradable and non tradable sectors. In this regard, the crisis could present an opportunity to push forward with ambitious reforms that would help energise growth. A €20bn IMF-led rescue package was also, announced for Romania. The
Fund approved a two-year stand- by arrangement for Romania worth nearly (€13bn and the EU agreed to contribute another €5bn to the bailout which includes also loans from the World Bank and the European Bank for Reconstruction and Development/EBRD. The Bucharest government passed a plan allocating 20% of the country’s budget to finance massive public investments in infrastructure - transport, environment, healthcare, edu- cation and roads - the main sector that will create jobs and ensure a certain degree of economic growth And there has been
GDP per head 2009
Country
EU
Slovenia Hungary
Croatia Bulgaria Romania Serbia Montenegro Macedonia Bosnia/Herzogovina
Albania)
8,000 7,000
5,300 5,000
considerable investment in
10,000 9,000
13,200 10,600
€
27,500 24,300 16,300
the region as part of a longer term plan: In Bulgaria, Austrian energy company EVN will invest €95m to build a wind power park. Slovenia’s largest retailer Mercator plans also to Invest some €80m through the construction of up to nine hypermarkets. The investment comes under the company’s expansion strategy for the Southeast Europe. Mercator aims to become the leading chain of fast moving consumer goods in the region. Austrian media company Stevia Communications has acquired a 50% stake in news broadcaster Evropa TV. Furthermore, South Korean Choice Consortium plans to build a $20m industrial park. In Romania, Nokia has launched accessories production. The factory will be
the only supplier for Nokia accessories in Europe. The investment amounts to €60m. The Agency for Foreign Investment announced some 20 foreign inves- tors plans to invest in the country since the beginning of last year, with the total value of projects amounting to €1.5bn, and 5,000 new jobs Zoran Radumilo (above), Cisco’s channel boss in the region says it has been
a good year since our last report (IT Europa May 8, 2009), and that it has all gone nicely to plan: “In the year since we last spoke – it has come out exactly as we said at the time. We are on a good track. I’m still responsible for the Cisco partner organisation, but for even even more countries in CEE. I am responsible for almost all the countries excluding Czech Republic, Bosnia- Herzegovina Macedonia and Albania.” Is it fair to discuss all these countries together? “From the IT point of view
we can put them all together, in spite of the Hungary and Romania leading in terms of the quantity and quality of the IT business. They lead because they
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