Emerging European economies will grow at a faster pace next year, driven by a recovery in the crisis-hit euro area, the region’s main export market, the International Monetary Fund said.
The region will grow 2.6 percent next year, compared with an estimated 2 percent in 2012, “largely owing to improving conditions elsewhere in Europe,” the Washington-based lender said today in its World Economic Outlook.
The euro region is the top destination for emerging Europe’s exports and the main source of its investment and bank financing. Growth has slowed as the euro area’s economic slump deepened and foreign lenders cut support to their units to repair balance sheets. Still, emerging Europe is perceived as less risky based on credit-default swaps than debt-ridden nations using the euro, the IMF said.
“‘Emerging Europe was significantly affected by the euro-area crisis during the past year, including through the deleveraging of western European banks and declining capital inflows,’’ the IMF said. ‘‘Nevertheless, unlike in 2008, risk contagion from the euro-area crisis has remained limited, and credit-default swap spreads for most countries in the region remain well below those for the economies of the euro-area periphery.’’
Polish CDS have declined 177 basis points to 103 basis points this year and Hungarian swaps have dropped 289 basis points to 346, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in privately negotiated markets. Portugal’s CDS have slid 640 basis points to 442 during the same period. Spanish swaps are at 350, compared with 380 at the end of 2011.
Inflation pressure is set to decline ‘‘rapidly’’ in several emerging European nations, giving central banks additional room for easing monetary policy, the IMF said. Inflation will average 4.4 percent next year, down from 5.6 percent in 2012, the fund forecast. It was 5.3 percent last year.
Turkey, where domestic demand is slowing following fiscal policy tightening, will grow 3 percent in 2012 and 3.5 percent next year, the fund said. Expansion in Poland, the EU’s largest eastern economy, will decelerate to 2.4 percent growth this year, and 2.1 percent in 2013, from 4.3 percent in 2011, it said.
Hungary’s economy will contract 1 percent this year, recovering to 0.8 percent growth in 2013, while Latvia’s GDP will grow at the fastest pace in the region this year, expanding 4.5 percent this year and 3.5 percent in 2013.