Slower, but more secure
The region might be less attractive for potential investors than the Far East, but, according to analysts, this must be offset against one of CEE's biggest pluses-its very low crisis risk. GDP growth forecasts for Poland prepared by UBS Wealth Management are in-line with government expectations of 4.7 percent. The Czech Republic is to maintain its 3.8 percent growth in 2005, while Russia is expected to slow down from 6.5 percent to around five percent.
The investment group suggests that after good returns last year the Polish equity market is likely to be less impressive. UBS's Dr Olivier Adler estimates average stock returns of 10 percent for the next 12 months, but adds: "Eastern Europe stocks are still somewhat undervalued." Equity remains UBS's best bet, despite fair interest rates in Poland.
High fiscal and trade deficits still place the country in the bottom quarter of the emerging markets. Adler warns that no one should hope for a dramatic shift in the trade balance any time soon.
On the other hand, having flexible exchange rates in local currency might help growth, as it happened for exporters in 2004. "The discussion for the government and central bank is open. The worst thing would be not having the euro and not gaining profits from independency," says the President's chief economic advisor Professor Witold Orłowski.
The investment group suggests that after good returns last year the Polish equity market is likely to be less impressive. UBS's Dr Olivier Adler estimates average stock returns of 10 percent for the next 12 months, but adds: "Eastern Europe stocks are still somewhat undervalued." Equity remains UBS's best bet, despite fair interest rates in Poland.
High fiscal and trade deficits still place the country in the bottom quarter of the emerging markets. Adler warns that no one should hope for a dramatic shift in the trade balance any time soon.
On the other hand, having flexible exchange rates in local currency might help growth, as it happened for exporters in 2004. "The discussion for the government and central bank is open. The worst thing would be not having the euro and not gaining profits from independency," says the President's chief economic advisor Professor Witold Orłowski.
