PARIS (MNI) – Economic growth in central and eastern Europe will
not return to the “exceptional” pre-crisis pace in the future, since
there will better control of lending, ECB Governing Council member Ewald
Nowotny predicted Monday.
For many eastern EU members, the financial crisis was a “wake-up
call” that came at the right time, the governor of the Austrian National
Bank commented at a Franco-Austrian conference here, noting the
existence of excessive consumption growth fueled by too low-interest
rates and even “bubbles” in some countries.
The crisis allowed authorities to “recognize potentially dangerous
trends in time” and limit their impact, he observed.
Current policy aims to protect growth dynamics through appropriate
lending levels, while “avoiding excesses” of the past, Nowotny said.
Thanks to new banking regulations and closer macro-prudential
supervision, there will no longer be lending growth rates of up to 16%
per year — “which is good,” he added.
“That means we have learned from the crisis,” he said. Now the
challenge is to apply these lessons in policy.
The impact on the Austrian economy is likely to be much greater
than in France, for example, the central banker suggested. Trade with
the region amounts to around E20 billion per year for both countries;
but this accounts for less than 1% of France’s GDP, compared to around
6% for Austria.
[TOPICS: M$F$$$,M$X$$$,M$$EC$]