Post by Bozur on Feb 17, 2010 18:33:04 GMT -5
Greek crisis raises concern in Balkan neighbours
SVETLANA JOVANOVSKA
Today @ 09:58 CET
Economists are concerned that the Greek financial crisis will have spill-over effect on the Balkan countries, and will continue to affect the region in the medium and long term.
Greece is an important investor in all south eastern countries. "All companies that have business with Greece will feel the crisis. They are interconnected in different ways and this atmosphere will have repercussions but it is too early to say precisely to what degree," said Abdulmenaf Bedzeti, an economic analyst and a former Macedonian development minister.
Analysts believe that planned projects
by Greek investors in Balkan countries
will feel the brunt of Greece's crisis
(Photo: jay bergsen)
Sam Vaknin, an economic expert in Macedonia, is convinced that the degree of investments from Greece will diminish and that people will lose their jobs. For Macedonia, a country with more than 30 percent unemployment, the Greek crisis could be particularly risky.
Despite political tensions between the two countries concerning a name dispute, 280 Greek companies have invested in Macedonia in recent years.
Meanwhile, migrant workers in Greece, especially from Albania, will probably be hit by the crisis. The up side is that they generally work in agriculture and tourism, sectors that are less affected by the economic downturn. "For the time being the money immigrants send back home is not showing a dramatic reduction," said Vladimir Gligorov from the Vienna Institute of Economy.
Mr Vaknin, for his part, warned that the Balkan countries will continue to feel the effect of the social demonstrations in Greece - the border with Bulgaria and Macedonia has already been blocked a few times by angry workers.
Planned investments
However, analysts believe the worst consequence of the Greek crisis for its neighbours could concern planned investments. "They will not be realised and banks will keep the money for domestic needs," said Mr Gligorov. He added that Greek investors will probably not renounce on the investments they already have in the Balkans, however.
There are also concerns about financial stability. If Greek banks lose their soundness, credit activities in South East Europe will come under threat. In Macedonia, Albania, Bulgaria, Romania and Serbia, Greek banks provide more than 10 percent of loans.
Bulgaria, Romania and Serbia seem the most exposed in terms of banking relations and in Bulgaria and Serbia this overlaps with trade links, says a study by Barclays Capital.
The investment bank does not expect that south east Europe will face an "ouzo crisis" in the way the "Mexico tequila crisis" affected Latin America in 1994, though.
Vladimir Gligorov shares this analysis: "Banks are an important sector of Greek investment and the influence on their Balkan investment depend on how much the banks in Greece will be hit by the crisis. Clearly, they will need to finance the domestic economy and this will reduce their capacity to give credit in the Balkans." For the time being, there is no great demand for credit in Macedonia, Serbia or Bulgaria, he added.
For Bulgaria and Romania problems may arise as they wish to rapidly join the euro area. The Greek crisis could have a negative impact on this goal due to doubts in the eurozone about the fiscal discipline of new candidates.
waz.euobserver.com/887/29490