forecasts for the region and Slovakia

Comment on EBRD forecasts for the region and Slovakia in the Financial Times:


"The countries with fixed exchange rates, including Latvia, face difficulties because they must adjust their real exchange rates through domestic wages and prices. States that started the crisis in good shape and are internationally competitive, such as Poland, Slovakia and Slovenia, could see GDP growth of 2-5 per cent next year. But Hungary, with a difficult fiscal position, is forecast to remain in recession"

Meanwhile in the ever-confident anglo-sphere (again from the FT)

"After the shock came the arguments. No one expected the Office for National Statistics to say the economy shrank by 0.4 per cent in the third quarter; the survey data and early official data had been too strong.

Few were therefore minded on Friday to modify their entrenched positions about the UK economy, the policies needed to revive it or whether the figures contained any useful information. Stuck in the middle of these clashes, of course, was the ONS.

Its preliminary data on gross domestic product are an attempt to provide an early snapshot of economic performance. The downside is that its coverage is limited, with this first estimate based on only 40 per cent of the total hard data on output and nothing on spending or incomes.

George Osborne, the shadow chancellor, said: "This is deeply disappointing news. Britain is now in the deepest and longest recession in its modern history. Britain's economy is still shrinking a full six months after France and Germany started growing."

Meanwhile, economists agreed that the GDP figures made it more likely that the Bank of England would extend its efforts to create money and pump it into the economy in November by expanding the £175bn programme of asset purchases known as quantitative easing.

Yet the most vociferous arguments took place in the City, where analysts clashed over the importance of the figures.

Danny Gabay of Fathom Financial Consulting insisted the appropriate reaction was far greater caution about predicting recovery.

"The UK has some formidable headwinds, not least of which is the over-burdened consumer which is having to cope with a broken banking system, rising unemployment, and falling income growth," he said.

This view was described as "baloney" at Goldman Sachs, which put greater weight on more optimistic recent surveys of companies. Analysing the accuracy of the past decade's preliminary GDP figures, Kevin Daly, Goldman Sachs economist, concluded that they contained "no statistically useful information about growth" because they were so heavily revised, often years after the event.