Baseball91's Weblog

April 18, 2009



I live in a country that seems indifferent for the most part to the difficulty in different parts of the world. All politics was local. No one wonders what is going on in Mexico or Canada, much less the Baltic nations. One day you wake up to discover that those gangs and drugs in the inner city that you moved to the suburbs to escape…..well that there is no real escape.

By this time next year, the three Baltic nations of Latvia, Estonia, Lithuania as well as Russia, Hungary, Ukraine, Kazakhstan, Romania, Serbia and Georgia, all with negative outlooks, risk being downgraded by Fitch Ratings. “That is a clear signal how we see the direction of creditworthiness in the region,” with their reliance on exports and a consumption-fueled credit boom, Fitch Ratings reported. They seem to be the Moody’s of Europe.

The worldwide credit drought has left Eastern Europe among the most vulnerable in the global economic slump. The worldwide credit drought has left banks with more than $2 trillion in losses and write-downs. Fitch estimates economic contraction of Latvia’s economy by 12 percent this year, with 10 percent contraction in Estonia and Lithuania.

Edward Parker of Fitch Ratings said: “Real economic activity is still falling quite rapidly. This year will be by far the deepest recession since the early years of transition” to free market economies from Communism in 1989. With the return to growth in 2010, Fitch is forecasting a 1.4 percent rate of growth which will be “a very weak recovery. It’s not going to feel like much of a recovery,” Parker said. “We’re still going to see rising unemployment, pressure on bank balance sheets and public finances and some political pressures stemming from that.”


Emerging Europe will see its recession deepen before improvement that may lead to credit rating downgrades in about half the countries which will be determined by the ability of countries to keep with the condition imposed by the International Monetary Fund in the way of spending cuts after they have received bailout money. Fitch Ratings is assessing balance of payment trends, the ability of countries to refinance external debt, economic policy responses to the hardships and success in attracting international aid when deciding on rating cuts.


Among the poorest countries in the region with the weakest credits are Moldova at B-, Ukraine at B, and Georgia at B+. These poorest countries are with weaker governmental institutions, more vulnerable to sharp declines in capital inflows. The strongest countries credit-wise in the region are the Slovakia and the Czech Republic at A+, and Poland at A-. Slovakia’s Euro-region membership makes it a “safe harbor.”



Better placed than other East European countries, because of lower deficits, credible exchange rates, and a lack of previous fast credit expansion, both Poland and the Czech Republic are to withstand “global shocks” in the assessment of Fitch Ratings.


Some political pressures stemming from that? In Moldova, the recent scene following a recent parliamentary election was of demonstrators gathering in front of the country’s Parliament, calling for an end to communism, claiming the election result was fraudulent. According to the Prague Post, “The demonstration morphed into a riot when a portion of the crowd dodged police barricades and infiltrated the government complex, ransacking and setting fire to the premises. In what Stela Brailean, 23, called an overblown response, Moldavian communist authorities then reportedly commenced mass arrests, communication blackouts, and various intimidation techniques to repossess their grip on power, drawing the attention of European democracies. ‘The communist party is introducing restrictions, persecuting people, installing a totalitarian regime,” Radio Free Europe/Radio Liberty Moldova bureau chief Vasile Botnaru said in a telephone interview from Chisinau. “If it escalates, it’s absolutely a danger for democracy.’”


“The worsening economic situation in the country – the poorest in Europe – has widened the ideological gap between the pro-Western youth in the capital and left-leaning older generations nostalgic for the communist promise of economic security. Another gap, said Alina, exists between the country’s ethnic Romanian majority and Russian minority, a clash further fueled by an ongoing dispute over Moldova’s secessionist Trans-Dniester region, a frozen conflict zone jointly administered by a regional government, Russia and Moldova since a 1992 ceasefire.”


1 Comment »

  1. Comment by baseball91 — September 4, 2015 @ 4:06 AM | Reply

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