The Eastern Europe region looks to be doing better-than-expected. The region’s economies, along with related exchange traded funds (ETFs), have shaken off the clutches of the financial crisis and may be on course for an expansion if the forecasts are correct.
The European Bank for Reconstruction and Development has upgraded its economic growth forecasts for Russia, Turkey, Kazakhstan and Poland, with a revised 3.3% growth across the region. The previous forecast called for 2.5% growth, reports Joe Parkinson for The Wall Street Journal. The EBRD estimates that the region contracted 6.1% in 2009.
Chief Economist Erik Berglof says that “appropriate public and private sector policies and actions to clean up balance sheets, restructure debt and deal with distressed assets will be important to help sustain credit growth and support economic recovery.”
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Turkey. Turkish Central Bank Governor Durmas Yilmaz highly expects that inflation will be between 5.5% and 8.3%, which may force interest rate hikes later this year, writes Hatice Aydogdu for Interactive Investor. Yilmaz hopes to stabilize inflation at around 5% in the medium term.
The economy contracted around 6% in 2009 and the government projects a 3.5% expansion for the year. Yilmaz puts an optimistic estimated growth at around 5%. [Why Turkey is worth a look.]
- iShares MSCI Turkey Index (NYSEArca: TUR)
Poland. According to Andrzej Malinowsky, president of the Confederation of Polish Employers (KPP), Poland’s economy didn’t collapse but slowed down because Polish employers adapted during the economic downturn, as sated in the Polish Market Online. Janusz Steinhoff, deputy prime minister and former minister of the economy, believes the economy is doing quite well with all things considered as a result of Polish entrepreneurs and system changes launched early.
The EBRD expects Poland to grow 2.3% this year. [Invest with a Poland ETF.]
- Market Vectors Poland (NYSEArca: PLND)
Russia. The best-performing sectors in Russia in 2009 were banks, telecommunications and oil companies. The Russian markets were bolstered by the governmental measures that flushed the banking system with cash, provided guarantees and propped up the ruble. The swift rebound in commodity prices and increase in demand for energy, metals and other natural resources have also helped Russia’s recovery. [Reasons why Russia ETF may be riding a bull.]
The EBRD expects Russia’s economy to expand 3.9% in 2010.
- Market Vectors Russia (NYSEArca: RSX)
Other related Eastern European ETFs include:
- SPDR S&P Emerging Europe (NYSEArca: GUR): Russia, 64.2%; Turkey, 15.3%; Poland, 10.8%
- iShares Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR): Russia, 74%; Poland, 14.5%
Max Chen contributed to this article.