Eastern Europe: Recession Bottoming Out

In the advanced reform countries, the expansion of the private sector and of foreign trade – visible results of the transformation – contribute to stabilisation, whereas in the other Eastern European countries, particularly in Russia and Ukraine, stagnation of reforms and growing disintegration deepen the crisis. In 1992 price increases decelerated in East-Central Europe, except Croatia, Russia and Ukraine, who are facing hyperinflation. Largely as a result of the CSFR split, but also due to recession in the West, a real decline of GDP of up to 2 percent must be assumed for East-Central Europe in 1993; but Poland and Hungary may by now have overcome the trough of the crisis. South-East Europe, however, is likely to see a further GDP decline by 5 percent in 1993, Russia and Ukraine may face a slump of up to 15 percent, respectively. Following the implementation of bankruptcy laws and due to reduced financial leeway, a significant rise of unemployment must be expected for the whole region.