The European Bank for Reconstruction and Development (EBRD) says the negative impact of the eurozone crisis on emerging European markets is spreading further east, especially to Russia.
The chief economist for the EBRD, Eric Berglof ,explained some of the findings contained in his organization's new "Regional Economic Prospects" report released on July 25
"For a long time we have been concerned with the impact of the eurozone crisis on our region," he said. "What we see now is that it is not only affecting Central Europe and Southeast Europe. It is also spreading further east to Russia and to Central Asia. This is something we are quite concerned about."
As a result, the EBRD has slashed its economic forecast for the former Soviet bloc, predicting growth for the region of 2.7 percent in 2012, down from a May estimate of 3.1 percent.
The EBRD also lowered its regional growth forecast for 2013 to 3.2 percent, down from May's prediction of 3.7 percent.
For the Russian economy alone, the new growth forecast for 2012 is 3.1 percent, down from a May prediction of 4.2 percent.
The EBRD report warns that "the biggest downside risk for the whole transition region" continues to be "a possible further deterioration of the eurozone crisis."
The EBRD linked decreased growth in some countries with the falling price of commodities on world markets, principally the lower price for oil.'
Lower growth is forecast for the 17 countries that use the euro, and the European Union generally, as the bloc struggles to emerge from the debt crises that have engulfed Greece, Portugal, Ireland, Spain and Italy, and continue to threaten other member states.
But the report noted that "idiosyncratic events," such as a gold mine strike in Kyrgyzstan, were also responsible for causing a revision of that country's gross domestic product, estimate (GDP) from the 1 percent growth forecast in May, to 0.5 percent growth under the current forecast.
The forecasts for other Central Asian and Eurasian countries remained the same as the May estimates, with Mongolia topping the list with a predicted 14 percent growth, followed by Turkmenistan with 10 percent growth, and Uzbekistan with 5 percent.
Kazakhstan -- which, owing to its hydrocarbon and mineral wealth, had GDP growth approaching 10 percent for much of the last decade -- is still forecast to see 5 percent growth this year.
The same was generally true for countries further west.
Among the countries located closer to the European Union, the report said the forecast for Belarus was increased growth, to 4.5 percent from the 2.5 percent forecast in May.
The EBRD said the economy of Belarus "has been stabilizing after a deep, policy-induced balance of payments crisis."
The EBRD also credited "soft loans" from a Commonwealth of Independent States (CIS) stabilization fund, and bilateral loans from Russia, with helping prop up the economic situation in Belarus.
The EBRD was founded in 1991 to help foster investment in some 30 countries from Eastern Europe to Central Asia.
With reporting by AFP