KIEV (Thomson Financial) - The new market economies of the old Soviet bloc face slower economic growth this year, but have mostly shrugged off the impact of the global credit crunch, the EBRD said on Sunday.
The European Bank for Reconstruction and Development's 17th annual conference in Kiev, which ends Monday, was taking place against a backdrop of world economic turmoil and soaring prices for commodities like oil and wheat.
'The anticipated slowdown reflects very rapid increases in consumer prices, which are likely to impact household incomes and consumption,' the London-based bank said in a statement.
It added: 'The international credit crisis has so far had only a limited impact on the region as a whole. Banks in the region had little if any exposure to structured assets linked to US mortgage markets.'
The bank, created in 1991 to help former communist nations in Europe and central Asia in their transition to market economies, has pledged to step up its investment in agriculture as the world faces soaring food prices.
GDP growth in its 28 countries of operation, which includes Bulgaria, Russia and Ukraine, was forecast to stand at 6.0 percent this year, down from a record 7.3 percent in 2007, the bank has said.
'Difficult times are a reminder of the need for the EBRD as a committed investor, with high standards, even during turbulence,' outgoing bank president Jean Lemierre said in a speech to the board of governors.
Lemierre, attending his final conference after eight years in charge, added there are still risks for the EBRD zone.
'Financial markets around the world have been turbulent for months now and there are risks even for this region, where economies are strong and growing,' he said.
'We are seeing more reluctance and tighter capital. Investors are hesitating,' Lemierre told delegates who also heard from Ukrainian President Victor Yushenko and Prime Minister Yulia Tymoshenko.
German deputy finance minister Thomas Mirow is widely expected to be appointed on Monday to succeed Lemierre. tf.TFN-Europe_newsdesk@thomson.com AFP/hjp COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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