« Imperial Energy is stripped of 5 licenses - Fidel Castro has given the interview »

Inflation does not allow Baltic to join Eurozone

22 September 2007
Written by: webmaster Posted under Globalization

Introduction of euro in Lithuania, Latvia and Estonia is postponed at least up to 2010. Such decision has been caused by high inflation for the sake of which artificial decrease in the government of the Baltic countries did not begin to endow economic growth of the states. In fact, in experts’ opinion, the negative balance of the above-named countries and their strong dependence on bank capital inflow can lead to negative consequences.
Historical experience of other countries has also become a powerful argument concerning the delay of joining Eurozone. So, in the end of 90th a number of the former communistic countries – Czech Republic, Slovakia and Poland - have faced a similar problem.
Then these states had a huge deficiency of current accounts and trading balance. Finally, (in many respects owing to the big inflow of direct foreign investments) they managed to cope with misbalances and to increase productivity and volumes of their export.
But this time, in analysts’ opinion Baltic countries will not cope with crisis only by means of investment.
Investors are very strongly worried about the economic situation in these countries. That is why they are going to sound their position before the governments of the Baltic countries, which postpone acceptance of more rigid decisions.
Let’s remind, that Latvia and Bulgaria plan to enter Eurozone at the beginning of next decade, and Romania has postponed acceptance of the European currency up to 2014.

 




Related posts:

Leave a reply

You must be logged in to post a comment.