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Index - News - 1992 - EMU - Cataclysm - Economics - Wall Street - US Dollar LitauenDespite the region’s small size, the intensifying crisis in the Baltics cannot be treated as a freakish local squall of little concern to outsiders.
Bank failures or plunging currencies in the three Baltic nations – Latvia, Lithuania and Estonia – could threaten the fragile prospect of recovery in the rest of Europe. These countries also sit on one of the world’s most sensitive political fault-lines. They are the European Union’s frontier states, bordering Russia. Gideon Rachman, Financial Times, August 3 2009 Lithuania rules out devaluation Lithuania’s finance ministry forecasts that the economy will contract by 18.2 per cent this year, while the national central bank predicts a slump of 15.6 per cent. Lithuania’s finance ministry forecasts that the economy will contract by 18.2 per cent this year, while the national central bank predicts a slump of 15.6 per cent. The public spending cuts and tax increases required to tackle the recession, while keeping the litas pegged to the euro, have generated social and political tensions in Lithuania, as in neighbouring Latvia. Lithuania is regarded as the next most likely European Union state As in neighbouring Latvia and Estonia, Lithuania’s once-booming economy has gone sharply into reverse as credit and export markets dry up, shattering consumer and business confidence. “Our exit strategy from this crisis shall be to join the eurozone as quickly as possible,” Mr Semeta said. Bevare oss för euron
Över 90 procent av alla pengar i Estland som lånats ut har skett i euro. I Lettland och Litauen är situationen likartad. I Estland har varannan kund sitt bolån hos Swedbank och 85 procent av banksystemet är svenskt. I Lettland och Litauen har Nordea, SEB och Swedbank också en stor dominans. Ordet devalvering får inte ens sägas på telefon av bankanställda i Lettland - där har säkerhetspolisen lovat att utreda vilka som ligger bakom finanskrisrykten. RGE Monitor's Newsletter All three Baltics (Estonia, Latvia, and Lithuania) boomed over the last seven years and posted double-digit growth rates at their peak, helped by cheap credit from Scandinavian parent banks and EU membership in 2004. Now these economies are in the midst of a sharp slowdown, with Latvia and Estonia officially in recession.
Swedish krona falls on Baltic exposure Traders said talk that several large funds had unwound their exposure to Sweden exacerbated the move, while a greater than expected rise in Swedish unemployment also weighed on the currency. |