Bulgaria is one of the countries in Eastern Europe whose economy will avoid a recession and the devaluation of their currency, European Bank for Reconstruction and Development (EBRD) chief economist Erik Berglöf told Dow Jones Newswires in an interview.

Bulgaria and other economies in the region may have to face certain challenges, but for the time being held their ground against the gravity laws that brought the hard landing of many European economies, Berglöf said.

The feeble macroeconomic indicators of countries in the region were compensated by their membership in the European Union, which guaranteed inflows of foreign capital, he said. Romania and Bulgaria joined the bloc in 2007, while Serbia and Croatia are in talks to join the bloc.

The presence of foreign groups on the local banking markets was a guarantee that domestic lenders would be backed by their majority shareholders if the credit market continued to contract.

Berglöf said that the current market situation could not be compared to the crisis some of the developing economies suffered in the 1990s when their current account gaps caused serious trouble. Wide current account deficits are still an issue for many of the countries, but their economies will see corrections rather than negative growth.

Source: Dnevnik.bg