World Bank: Global economic crisis hits families in ECA

11:17, October 04, 2009      

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The World Bank (WB) said here Saturday that the global economic crisis reversed the impressive economic growth of recent years in Europe and Central Asia (ECA), hitting families hard with higher unemployment and lost wages.

"The global financial and economic crisis has literally hit home in many parts of ECA," Philippe Le Houerou, WB vice president for the ECA, told a briefing here.

"What started as a financial crisis has become a social and human crisis. Just as banks were under stress, families are now the ones under severe stress as they see breadwinners lose their jobs and have trouble paying their bills," he said.

In the latest regional brief of ECA, WB said the region has been hit hard by the global financial and economic crisis.

Several countries in ECA are struggling after being hit "probably worst of all" by the financial crisis, said the region's chief economist Indermit Gill.

According to statistics from WB website, economic growth across the region is expected to be a negative 6 percent in 2009, with several countries in the negative 10 percent range. Official unemployment has increased from 8.5 million to 11.5 million, but the actual number of unemployed may be much higher.

According to WB, the region is projected to have an additional 15 million poor or vulnerable people in 2009.

"Instead of the number of poor falling by 15 million in 2009, we now project poverty to increase by about 15 million," said Gill.

"There are already 145 million poor people in the region, or almost one-third of the total population," the economist said, adding that "for them, the crisis has made an already tough existence even tougher."

Gill also stressed that for workers and their families in ECA, the talk of recovery might seem premature, although much of the world is getting good economic news this autumn.

Due to the slowing of exports and migrant remittances and sharp drops in commodity prices, ECA countries have been hit relatively early and with greater severity than other developing regions, WB said.

"In particular, the effects of the crisis are being felt through three key transmission mechanisms, namely financial, product and labour markets," it said.

After analysing the causes behind the ECA economies' slowdown, the bank pointed out ECA should response to the crisis with more measures to promote economic integration.

"The best response to the crisis is to maintain this integration and look to increase resilience to external shocks through the implementation of solid financial, fiscal and social policies," said the Washington-based bank.

The WB and The International Monetary Fund (IMF) are set to hold their annual meetings in the biggest Turkish city of Istanbul next week.

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