Central Asian recovery weak, says World Bank

08:43, October 09, 2010      

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While Eastern Europe and Central Asia are emerging from the worst global recession since the 1930s, recovery has been weak, with a jobless rebound in some nations and uneven growth from country to country, the World Bank said Friday.

"The recovery is there. The less good news is that it is not such a strong recovery, and in fact some of the countries are still in the negative territory," said Philippe Le Hourou, vice president for Europe and Central Asia Region at the World Bank.

"Some are (seeing) very very slow recovery. And also part of the bad news is unemployment. We don't see a change yet in the unemployment figures," he said at a press briefing in Washington.

Turkmenistan and Turkey are among those growing at the strongest rates, in contrast with a handful of countries including Latvia and Romania, which are seeing negative growth, he said.

"This recovery has a 'multi-speed' character," said Indermit Gill, chief economist of the Europe and Central Asia region of the World Bank.

Indeed, for 2010, the World Bank's regional forecast is around 3.9 percent growth, he said at the same press briefing.

"But this number hides a big variation in expected growth rates between countries," he said.

Rates range from a contraction of around negative 2 percent for Romania and Croatia to a "healthy" 4 percent growth for Poland and the Ukraine, he said.

Kazakhstan and Georgia will see around 5 percent growth and Turkey and Turkmenistan will see around a 7 percent plus rate of growth, he said.

"Countries can keep this momentum going by staying open, by making government finances stable and by improving the business climate," he said.

But in much of the region, the recovery is a jobless one while GDP losses could be regained by most countries by the end of 2011 if current growth trends continue, employment could take much longer to improve, he said.

This means that labor regulations and taxes should be reassessed to see if they are helping improve the employment picture. It also means safety nets will be needed for a while, " but we think that these safety nets should be 'smart' safety nets that both help people stay out of poverty and get into jobs,"he said.

The nature of the recovery is also tentative, and for many of these export-oriented nations, the effects of currency devaluations may now be exhausted, he said. Enterprises should be made more confident and more competitive by better government finances and a better investment climate at home, he said.

"But these reforms will start paying off a lot only when Western Europe starts to grow again," he said, adding that it is impossible to consider growth in the region without growth in Western Europe, as the region is "super coupled" to Western Europe.

Source: Xinhua


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