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Florian Fichtl, Country Manager
World BankOctober 19, 2009
Recovery underway
Middle-East & North AfricaEast Asia & Pacific
South Asia
Europe & Central AsiaEurope & Central Asia
Industry has stopped shrinking
Recovery underwayInterest rates are lowerEmerging-market bond spreads have fallen but remain higher than pre-crisis levels
Source: World Bank, DEC Prospects Group
Syndicated bank loans by borrower type (2009 q3 as of Aug. 25)Syndicated bank loans by borrower type (2009 q3 as of Aug. 25)
…but private sector funding depressed
44
NMS affected severely by the crisis
Source: Eurostat
Tough times ahead for governmentsRapidly falling revenuesRising social expenditures and pension debt
Source: IMF World Economic Outlook
Tough times for households and businessesUnemployment will recover slowlyDifficulties in repaying bank creditNumber of vulnerable household increaseRising insolvencies Difficult access to credit
Tough times for banksCan no longer rely on large capital flows from abroadNon-performing loans are risingProfits declineDomestic credit (percentage change, year-on-year)
The way aheadReturn to growth might take longer in the region than in
the rest of the EUThis 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.