When we say Europe, the countries of Germany France and Britain immediately come to mind. When we say emerging markets we often think of India and China. Yet in the heart of Europe we have a group of European emerging markets. Included here are the countries of Hungary, the Czech Republic and Poland.
Like the rest of Europe, these countries are suffering from the worldwide economic downturn. However the extent of the damage to their economies has been much worse than the rest of Europe. Much of the growth in these economies has come from foreign investment, thereby creating large foreign exchange debts.
Hungary has been forced to seek help from the International Monetary Fund and the Czech Republic and Poland may be forced to follow suit. Bank lending to these countries declined from an inflow of $410 billion dollars to $67 billion in 2008 and will switch to an outflow of $61 billion dollars this year.
Credit Suisse estimates that Hungary will have a foreign exchange debt of $9 billion dollars coming due in three months and Poland will have $23 billion dollars coming due.
Banks have cut interest rates in an effort to support their economies and their currencies. But even with these measures many believe that there will be a "fire sale" of the Hungarian forint, Polish zloty and Czech koruna.
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Reader Comments (Page 1 of 1)
3-02-2009 @ 8:35AM
lou said...
My company was investing in Eastern European countries by shutting down US manufacturing plants and moving our jobs to their countries. The American worker has definitely contributed to the Eastern European cause. To Corporate America: sometimes when you gamble, you lose.