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Today's paper. Last Updated: 06/04/2012

UN Sees 4% Growth In East Bloc

GENEVA -- United Nations analysts predicted Tuesday that the former communist states of eastern and central Europe would see an export-led average growth of 4 percent this year, matching their performance in 1994.


But in its annual survey, compiled by the authoritative Geneva-based Economic Commission for Europe said the situation in Russia and most other states of the former Soviet Union remained "fairly depressing."


In the 12 ex-Soviet republics of the Commonwealth of Independent States, where economies shrank by an average 16 percent last year, output would probably continue to drop.


But this trend could be contained if governments persisted with reform -- especially in Russia, where gross domestic product fell by 15 percent last year, the survey said.


West European countries should see growth rise by 3 percent, it added. But it warned more investment and lower interest rates were needed to reduce high unemployment in the advanced economies.


In eastern and central Europe gross domestic product rose as a whole by just under 4 percent last year -- the first increase since the depression following the collapse of communism in 1989 -- and should repeat that figure in 1995.


"Nevertheless, there is an almost universal consensus that the recession has been much deeper and longer than initially expected, and that the transformation has not yet delivered," the report said.


It predicted that double-digit inflation would remain and, even if the expected growth rate of 4 percent was sustained, it would still take virtually until the turn of the century before the activity level of 1989 was equaled again.


In Hungary, long seen as one of the region's success stories, and in Romania, still to emerge firmly from post-1989 recession, growth might not be maintained this year, it said.




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