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The Banker
1 June, 2006
© 2006 The Banker, All Rights Reserved

This Month: Reports - An IIF Report Predicts Growth For The CEE Region While CGAP Analysis Reveals The State Of Microfinance Today

IIF REPORT: SUBSTANTIAL GROWTH FORECAST FOR CENTRAL & EASTERN EUROPE Stronger foreign demand and buoyant foreign direct investment inflows should accelerate growth in output and exports this year in central and eastern Europe (CEE), according to the latest report from the Washington-based Institute of International Finance, owned by more than 350 financial institutions worldwide.

Real GDP in CEE is forecast at 5% for both this year and next. Competitiveness losses, however, will contribute to slower growth in Russia and Ukraine, falling to 5.2% and 1.7% respectively this year, reinforced by a further slowdown of energy output growth in Russia and sharply increased natural gas prices in Ukraine.

Buoyant FDI triggered impressive accelerations in the Czech Republic and Slovakia, which are forecast to achieve real growth of 6.5% and 6.4% respectively, the highest in the region. In Bulgaria and Romania, output growth should continue roughly at last year's pace, with growth forecast at 5.8% and 4.4% respectively.

In terms of structural reforms, the IIF says reform momentum has diminished across the region as a result of recent or forthcoming elections and the rising appeal of populist parties opposed to market-oriented reforms and wary of foreign investment.

Privatisation is said to be likely to proceed only slowly this year and next, with progress on liberalising labour markets and business environments looking set to continue to lag.

CGAP REPORT: ACCESS FOR ALL Building Inclusive Financial Systems

For those interested in microfinance, the Washington-based Consultative Group to Assist the Poor (CGAP) is an indispensable resource and Bridget Helms' Access for All is a crucial tool to explain how microfinance can help the poor to become part of the financial mainstream.

This CGAP report reveals the highly dynamic nature of microfinance across the globe over the past 10 years and demonstrates that when international and domestic providers, governments, and financial service providers commit themselves to the vision of inclusive financial systems, the results can be impressive.

Ms Helms analyses how poor people use financial services and provides numbers of the global microfinance landscape. These include the number of borrowers in sub-Saharan Africa (17,400); how India's ICICI Bank has added 1.2 million microfinance clients in the past three years; and how in Mexico, Compartamos has grown from a donor-supported institution to a licensed financial institution with more than 400,000 clients.

Ms Helms explains how countries as varied as South Africa, the Philippines and Kenya are introducing mobile phone banking. This allows poor clients to deposit funds, repay loans, pay bills and transfer funds without leaving their village. This book is the most comprehensive analysis of microfinance available.

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