Impact of the global crisis on neighbouring countries of the EU
Impact of the global crisis on neighbouring countries of the EU(3 MB)
Summary for non-specialists(54 kB)
The global crisis that originated in developed economies has increasingly spread to emerging and developing countries via several transmission channels with negative spillovers. As a consequence EU neighbouring countries, being emerging and developing economies, face severe strains. The economies of the eastern EU neighbouring countries are expected to contract by 4% in 2009, being a 10 percentage point reduction in economic growth in comparison with 2008. Also, the economies at the southern Mediterranean rim see their economic growth halved. While having a similar set of policy instruments at their disposal as developed countries, challenges of mitigating or reversing the impact of the global crisis are quite different. This review analyzes the crisis’ impact on the economic outlook in-depth for the CIS region, for the Mediterranean region, and for the individual economies (including the GCC). Although financial indicators lead us to the conclusion that the CIS region is more exposed than the Mediterranean region, the latter is not sheltered and as vulnerable. The review points at combinations of vulnerabilities in both regions, which compound the risk of fiscal unsustainability and financial stress, relatively weak private sectors, high unemployment rates and weak automatic stabilisers, a shallow financial sector which hampered the rise of economic activity and thus welfare levels in the past, and a lack of buffers.
JEL classification E40, F40
(European Economy. Occasional Papers. 48. June 2009.
Brussels. Tab. Graph. Bibliogr. )