Investor confidence is now positive about central europe

INVESTOR confidence in central Europe entered positive territory for the first time in 20 months in May according to Sentiment Indicator published by ZEW Centre for European Economic Research and Erste Bank. May marked the first positive reading on the index since September 2007.

The index - which measures investor and analyst expectations for eastern Europe in the next six months rose to 6 points in May from minus 3.9 in April.

“All sentiment indicators are located in the positive range again,” according to Mariela Borrel, an
analyst for ZEW in Mannheim, Germany. The positive outlook “is a novelty since the outbreak of the financial crisis.”

Analysts seem to anticipate that the slower contraction rates being registered in the PMIs and lower interest rates in western Europe will feed through to increased demand for exports from eastern Europe while stimulus efforts in individual eastern countries will further help economic growth.

The six-month business outlook for Romania rose the most, gaining 26.1 points to 11.7 points,
following agreement to a €20-billion international loan by the European Union and the International Monetary Fund. Poland also did well, advancing 21.8 points to 20 points, followed by a 20.9-point gain over Hungary’s outlook, which rose to 15.3 points. Overall, the outlook
was most positive for the Czech Republic, which added 18.6 points to 24 points.

The Financial Market Survey CEE is a survey carried out by ZEW Mannheim and Erste Group Bank AG Vienna, among financial market experts and has been conducted monthly since May 2007. It offers insights into the experts’ assessment of the current economic situation and their expectations for central and eastern Europe, Austria and the euro zone for the next six months
concerning the general economic situation, inflation rates, interest rates, exchange rates and stock market indices. The CEE region observed in the survey consists of Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia.

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