Nery Alaev

Eastern Europe investment gap casts doubts

Nery Alaev looks into news about investment in Eastern Europe.

More financing is needed for Eastern Europe in order to close the gap between the region and wealthier parts of the world.

I’ve chosen to look into this news and discuss the implications.

Developing regions

Nery Alaev

Warsaw – does the region need more funding?

The European Bank for Reconstruction and Development (EBRD) has pointed out that $75 billion in investment a year is needed to bring the Eastern and Caucasus regions up to the levels expected at this stage in time.

Economies in Eastern Europe, such as Poland and Latvia, are among some of the quickest-growing in the region but they’ve been hampered by debt and the recent issues affecting wider European economies. These issues and others have stifled the progress of the mostly post-communist economies in the region.

In the EBRD’s annual transition report Hans Peter Lankes – acting chief economist of the EBRD – said:

“This investment gap is casting a serious shadow over the region’s long-term growth prospects”

“In order to boost investment and close that gap, new funding sources need to be explored.”

Similarly, another source at the EBRD said:

“This shortage of investment is unlikely to be sustainable in the long term without negative implications for growth”

The EBRD clearly has concerns about Eastern Europe’s investment gap, as it may hamper the region’s growth potential in the long-term.

Differing issues

As a whole, the region covered by the EBRD has a multitude of issues facing it and these must be considered by investors.

For example, Ukraine is currently in the midst of an armed conflict, the Balkan region faces ongoing ethnic and political tension and Greece is in deep financial depression.

While these issues may seem off-putting, there are still many reasons for investment in Eastern Europe – a primary reason being the region’s bright future.

Nery Alaev

Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.