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IMF sees East European economies slowing

East European economies have weathered the global credit crunch so far, but they are becoming increasingly vulnerable and governments must tighten fiscal policy to avoid overheating, the IMF told Reuters on Wednesday.

Speaking at the Reuters Central European Investment Summit, International Monetary Fund regional representative Christoph Rosenberg said he expects a slight economic slowdown in the European Union’s east European members. „(These countries) have done very well with the market turmoil until recently. We do think the countries have not used fiscal policies appropriately, some have really poured oil on the fire with their fiscal policies,” he told Reuters.

The IMF said in a report on the world economic outlook that it had revised downward all of its 2008 GDP forecasts for EU members in east Europe, with the exception of Lithuania which remained unchanged. The IMF report said the Baltics would see 2008 growth of 6.3%, down 0.2%age points from the previous estimate, while the outlook for central European members was revised down by the same amount to 4.9%. Southeastern Europe’s EU members will see growth of 5.7% in 2008, down 0.8 points from the IMF’s July forecast. (Read more)