LONDON (AFX) - The economies of central and eastern Europe as well as the Commonwealth of Independent States slowed down last year due to global factors, the European Bank for Reconstruction and Development said Sunday.
Average GDP across the 27 countries in which the EBRD invests grew by 5.6 pct in 2005, the bank said in a report released at the start of its two-day annual conference in the British capital.
That compared with record growth of 6.7 pct in 2004, which had marked the highest rate since the collapse of communism.
The EBRD, founded in 1991 to assist the transition of former communist nations to market economies, invests in 27 countries across central and eastern Europe, as well as the CIS -- a loose grouping of 12 former Soviet republics.
The Bank, which is headquartered in London, forecast growth to slow to about 5.3 pct on average across the 27 states next year.
Growth throughout the region was held back in 2005 by a slowdown in Poland, Romania and Ukraine in particular.
Economic growth in Ukraine plunged from 12.1 pct in 2004 to just 2.6 pct last year, according to the EBRD.
'Despite booming economies, low labour force participation and high unemployment remain common features of many transition countries,' the bank said in its Transition Report Update.
The bank's Update, which addresses key macroeconomic developments across its regions of investment, noted that the fastest rate of growth last year occurred in the CIS region, at 6.6 pct, followed by central eastern Europe and the Baltic states at 5.2 pct, and southeastern Europe at 4.5 pct.
'As the region integrates into the world economy, it becomes more vulnerable to global economic trends,' it added.
Resource-rich countries, such as Russia, would continue to benefit from high commodity price levels in the years ahead.
However, the report warned that a further cooling of investor interest would likely put pressure on countries with high debt levels and vulnerable economies.
The Update also cited remittances -- or cash which is sent home by migrant workers -- as vitally important for economic growth and stability in many transition countries.
According to the update, in five countries -- Albania, Bosnia-Hercegovina, Moldova, Serbia and Montenegro, and Tajikistan -- remittances were worth more than 10 pct of total GDP.
In more than one third of the countries in which the EBRD operates, remittance flows exceeded levels of foreign direct investment.
A small but significant amount of remittance money was ploughed into investment and the creation of businesses, according to an EBRD survey. newsdesk@afxnews.com afp/hjp COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited