East Europe, Turkey to see fast growth rates

Bloomberg

The region, which also includes Turkey, "might be close to the bottom of the V," said David Hauner, a London-based economist for emerging Europe, Middle East and Africa with the bank, in an e-mailed note yesterday, referring to the shape of the recovery, based on similarities between the current and the Asian crisis more than a decade ago.

Declines in industrial output across emerging Europe and Turkey have ranged between 20 percent and 25 percent from their peaks last year, a steeper drop than in most Asian countries during the 1997-98 currency turmoil, Hauner said. Poland’s output fell less severely, at a 13 percent rate, he said.

"Given this precipitous fall, we expect a recovery to imply at least initially high growth rates," Hauner wrote, adding that some countries, such as Turkey and Russia, will see quarter-on-quarter growth rates of more than 3 percent later this year. In Poland, the "rebound is likely to be optically less pronounced."

The bank forecasts the Russian economy will grow 2.4 percent and 3.5 percent in the next two quarters from the preceding three month periods, the note said. The prediction is annualized and has been adjusted for seasonal changes.

Turkey will post quarterly growth of 3.1 percent and 4.4 percent in the next two quarters, the note said, while the comparable figures for Poland will be 0.5 percent and 1.1 percent, according to the bank. The Turkish economy will expand 3.2 percent in 2010, after contracting 2.5 percent this year, the bank estimates. The Russian economy will grow 2.5 percent next year, after shrinking 2.1 percent in 2009, according to Hauner.