ECONOMIC OUTLOOK - IMF Says Economic Growth in Emerging Europe To Slow Down

"Growth is expected to continue to decelerate markedly, including on account of diminishing capital inflows and tight financial constrains," IMF said in the Emerging Europe section of its October report World Economic Outlook. This section of the report covers economic developments in the Baltic countries, Central European countries, Turkey and three southeastern Europe countries - Bulgaria, Romania and Croatia.

According to the IMF, weakening demand from western Europe will slow exports and investment in emerging Europe and high inflation will take a toll on real incomes and consumption.

"Growth in southern and southeastern Europe (SEE) and Turkey will also weaken, as a worsening external outlook and still high commodity prices weigh on consumption and investment," the IMF said.

The projected annual average consumer price index in emerging Europe is 7.8% for 2008 and 5.8 for 2009, up from 5.7% in 2007.

"Amid still-buoyant domestic demand and still-tight labour markets, inflation has been further boosted by increases in food and energy prices," the IMF said in its report.

The IMF added that strong domestic pressure particularly in Bulgaria, Romania and Turkey was a factor boosting inflation

The IMF sees current account balance in emerging Europe as percentage of GDP at -6.6% in 2007, -7.1% in 2008 and -7.2% in 2009.

"Countries with large current account deficits financed in part by non-foreign-direct- investment capital inflows are particularly vulnerable to a sharp reversal of capital inflows," the IMF said.

It added that the risks to the outlook are tilted to the downside and they relate to deterioration in external financing conditions, larger than expected weakening of external demand and renewed increases in commodity prices.

"In the SEE economies, action is need to rein in rising external and internal imbalances, mindful of the more volatile external financing conditions," the IMF also said.

Following are GDP, CPI and current account figures for the countries from Southeast Europe contained in the IMF report:

GDP GROWTH (in pct)

CONSUMER PRICE INFLATION (in pct)

CURRENT ACCOUNT BALANCE (as pct of GDP)