Greece and CEE

The now popular economist Nouriel Roubini has a view on the scope for contagion spreading from Greece to CEE. This topic was always going to come up, so it would be absurd to pretend it’s not an issue. The bad news is that (no kidding) there could be some contagion. The good news is that analysts seem to be treating CEE as a collection of individual countries, rather than a single, backwards bloc. Risks are higher in some countries than others. Note, in the abstract below, which countries don’t make the watch-closely list.

Eastern Europe will likely feel reverberations from Greece’s fiscal woes, Mary Stokes and Jelena Vukotic assert in a post on the RGE Analysts’ EconoMonitor. While the possibility of contagion via trade and FDI channels is limited, transmission via the financial channel is a real risk in Bulgaria, Romania and Serbia, given the strong presence of Greek banks in these markets. Any direct spillover effects will likely be limited to these South East European economies, but the potential for indirect effects must also be taken into account. On the positive side, Greece’s fiscal crisis highlights the comparatively better fiscal positions of EU newcomers in Eastern Europe. Nevertheless, troubles in the eurozone periphery could further curtail global risk appetite and delay euro adoption, which could weigh on emerging European assets going forward.

If you want full analysis, you have to follow the link (above) and pay Roubini for it.

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