The financial crisis affected central and eastern Europe (CEE) much less than previous crises in developing economies because of the multilateral nature of the support. But stability was bought at the cost of growth.
This was the message of Markus Schwaiger, head of financial markets monitoring at Oesterreichische Nationalbank, in his keynote address to the IFLR CEE Finance Forum on February 24.
Schwaiger argued that the Vienna initiative discouraged foreign lenders from withdrawing capital from CEE, unlike the south-east Asian crisis in 1997, Argentina 1998 and Russia in 2000. All of those lost 20% to 50% of foreign capital in a few years.
“The worst that countries involved in the initiative experienced was a fall of 7%. Overall in 2009 foreign lending shrunk to 4% growth from 40% in 2008. At least it didn’t shrink by 40%” said Schwaiger.
The Vienna initiative was a coordination of...