According to Thomas Mirow of the European Bank for Reconstruction and Development, risks are increasing for Eastern Europe as European banks struggle with failing loan quality and minimal growth.
Both central and southeast Europe are at threatened due to their heavy dependence “on the euro area as their major trade partner, and this comes on top of contagion risks through the banking sector,” Mirow explained.
He added that Eastern European countries must “stabilize their own financial sector to any degree possible and in the medium term of course to diversify their economies and also trading partners.”
The Euro Zone is facing what looks like an imminent recession as the current crisis spreads to the larger economies. In Moscow last month, IMF managing Director Christine Lagarde said Eastern Europe may be forced to tackle a credit squeeze as flailing banks use liquidity from the region.
