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Eastern Europe: Slump In Western Exports Hurting Economies

Washington, 20 September 1996 (RFE/RL) -- The largest private international group of commercial banks and major investors says that a slump in exports to Western Europe is pushing the nations of Central and Eastern Europe into a current account deficit this year.

The Washington-based Institute of International Finance (IIF) says that weak economies in Germany and other major west European nations have cut forecast export growth for Eastern and Central Europe countries from last year's 11 percent to an expected 2 percent this year.

The result, says the Institute, is that the current account of these nations -- the balance between the money flowing in and the money flowing out of a country, not counting investment -- is forecast to go from a surplus of $6.3 billion in 1995 to a deficit of $1 billion this year.

The managing director of the Institute, Charles Dallara, says the Czech Republic is having a particularly difficult time with shrinking exports and growing current account deficit, although Poland and Slovakia are also swinging from a surplus to a deficit.

Overall flows of investment into the region, according to the IIF, are down slightly this year, but will continue to grow in coming years. It projects direct and portfolio investment to these countries will be just over $10 billion this year, rising to $13.5 billion in 1997.