Eastern Europe economic-growth forecast cut by EBRD

Eastern Europe’s economic-growth prospects have worsened as the region’s largest economies, Russia and Poland, are slowing “significantly,” the European Bank for Reconstruction and Development said. While the effects of Europe’s debt crisis are “abating,” the biggest downside risk for the east is the lack of policies to promote growth in the developed part of the continent as euro-area recession extends to a second year, the EBRD said at its annual summit in Istanbul. “Russia’s slowdown is becoming a new source of weakness in the region,” the EBRD said. Russia’s economy would grow just 1.8% in 2013, it said - barely half the 3.5% it had forecast in January and last year’s 3.4%. Growth could pick up to 3.2% next year, but there was “no quick turnaround in sight.” Poland, the only European Union country to escape recession after the 2008 crisis, will grow 1.2% this year, slowing from last year’s 1.9%. The broader Central European region is expected to grow just 0.8%, the EBRD said, trimming its January forecast of 1.2%. Slovenia, Hungary and Croatia are seen stuck in recession, with Slovenia’s economy contracting 2.5% as it tries to resolve its banks’ bad debts without seeking international aid.