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From Crisis to Recovery

From Crisis to Recovery. Florian Fichtl, Country Manager World Bank October 19, 2009. Recovery underway. Industry has stopped shrinking. Middle-East & North Africa. East Asia & Pacific. South Asia. Europe & Central Asia. Recovery underway. Interest rates are lower

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From Crisis to Recovery

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  1. From Crisis to Recovery Florian Fichtl, Country Manager World Bank October 19, 2009

  2. Recovery underway Industry has stopped shrinking Middle-East & North Africa East Asia & Pacific South Asia Europe & Central Asia

  3. Recovery underway Interest rates are lower Emerging-market bond spreads have fallen but remain higher than pre-crisis levels Source: World Bank, DEC Prospects Group

  4. …but private sector funding depressed Syndicated bank loans by borrower type (2009 q3 as of Aug. 25) 4

  5. NMS affected severely by the crisis Source: Eurostat

  6. Tough times ahead for governments • Rapidly falling revenues • Rising social expenditures and pension debt Source: IMF World Economic Outlook

  7. Tough times for households and businesses • Unemployment will recover slowly • Difficulties in repaying bank credit • Number of vulnerable household increase • Rising insolvencies • Difficult access to credit

  8. Tough times for banks • Can no longer rely on large capital flows from abroad • Non-performing loans are rising • Profits decline Domestic credit (percentage change, year-on-year)

  9. The way ahead • Return to growth might take longer in the region than in the rest of the EU • This means smaller budgets for governments—need to restructure spending to support the vulnerable and growth enhancing activities • Continued attention to financial sector stability—lower access to credit and rising NPLs • Structural transformation of economy will depend on further improvements in product and labor markets.

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