Eastern European Outlook: Resilience is eroding...

The resilience of Central and Eastern European in the face of global
economic slowdown is on its way towards eroding. Until now, many
countries have maintained their growth thanks to vibrant domestic
economies. Today, however, pressure on the region's economies has
greatly increased as the euro zone has stagnated and the
repercussions of the international financial and credit market crisis
intensify. SEB's October 2008 issue of Eastern European Outlook
adjusts earlier overall growth forecasts downward.


"Because of intensified global financial stress, the global economic
outlook has become even gloomier just in the past month. This will
have unavoidable consequences for Central and Eastern Europe as well,
especially since the financial crisis has also reached Western Europe
in earnest. In our new scenario, Central and Eastern Europe can no
longer be viewed as a strong growth region, even though many
countries are of course showing good growth compared to Western
Europe," notes Mikael Johansson of SEB Economic Research, Chief
Editor of Eastern European Outlook.

GDP growth in the nine countries covered in Eastern European Outlook
will fall from an average of 7.4 per cent in 2007 to 6.0 per cent
this year, 4.5 per cent in 2009 and 4.8 per cent in 2010. Russia and
Poland stand out, however, with continued decent growth, but the
risks are on the downside. Countries with large external imbalances -
the three Baltic countries and Ukraine - are the most vulnerable to
tighter global credit conditions. Credit growth is clearly slowing
from a high level in Ukraine and will fall somewhat further in the
Baltics.

"The Baltics are being forced to undergo a tough economic adjustment
after their overheating in recent years. Their labour markets have
been surprisingly resilient, but unemployment is now climbing. In
Estonia and Latvia, most indicators today point towards a lengthy
recession which will persist during 2009 as well. A rebound in 2010
is expected to be marginal," Mr Johansson says.

Russia's economic deceleration will be moderate. The reasons are
large federal budget and current account surpluses and the ability to
respond to lower demand with a more expansive fiscal policy.

Ukraine's economic outlook has become quickly and noticeably
gloomier, after several years of strong expansion. Overheating
problems are not being resolved, due to political instability and
deteriorating terms of trade.

Poland will experience a soft landing. Underlying economic strength
promises relatively good economic performance. The government's new
target of a transition to the euro by 2011 seems a year too
optimistic.

Slovakia, the Czech Republic and Hungary will all be relatively hard
hit by the euro zone slowdown. Hungary is slowly recovering after its
earlier period of tough belt-tightening policies.

SEB is a North European financial group serving some 400,000
corporate customers and institutions and five million private
individuals. SEB offers universal banking services in Sweden, Germany
and the Baltic countries - Estonia, Latvia and Lithuania. It also has
local presence in the other Nordic countries, Poland, Ukraine and
Russia and a global presence through its international network in
another ten countries. On 30 June 2008, the Group's total assets
amounted to SEK 2,304bn (EUR 244 bn) while its assets under
management totalled SEK 1,295bn (EUR 137 bn). The Group has about
22,000 employees. Read more about SEB at www.sebgroup.com.

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For further information, please contact:
Mikael Johansson, Chief Editor, Eastern European Outlook, SEB
Economic Research, tel. [phone], mobile [phone]Bo
Enegren, SEB Economic Research, tel. [phone], mobile +46 70
718 03 13.
Mats Olausson, Emerging Markets, TCM, tel. [phone], mobile
[phone].
Elisabeth Lennhede, Press Officer, SEB, tel. [phone],
E-mail: [e-mail]