PRESS RELEASE: Eastern European Outlook: Resili...

Central and Eastern Europe will continue to show good growth, despite
the global economic slowdown and credit crisis as well as surging
inflation in the region. This is mainly due to vibrant domestic
demand, but also small exposure to the US as an export market. The
Baltic countries and Hungary will diverge, showing a weakening trend,
SEB maintains in a new issue of Eastern European Outlook.

Central and Eastern Europe will continue to show good growth, despite
the global economic slowdown and credit crisis as well as surging
inflation in the region. This is mainly due to vibrant domestic
demand, but also small exposure to the US as an export market. The
Baltic countries and Hungary will diverge, showing a weakening trend,
SEB maintains in a new issue of Eastern European Outlook.


Overheated Latvia and Estonia are decelerating markedly, partly
because of stricter lending practices. Meanwhile the Baltics and
other economies in the region are plagued by major imbalances in the
form of large current account deficits and/or high inflationary
pressure, which will ease only slowly.

"The very high economic growth of recent years in the Baltics has not
been sustainable, so it is logical that a period of adjustment will
come. Latvia and Lithuania now look set to follow in the wake of
Estonia's slowdown. Meanwhile the Baltic cool-down is coming in a
sensitive situation as the global economy is weakening. Exports are
expected to show resilience but the downside risks in our forecast
have increased," notes Mikael Johansson of SEB Economic Research,
Chief Editor of Eastern European Outlook.

In the nine countries covered in Eastern European Outlook, GDP growth
will slow moderately from an average of 7.4 per cent in 2007 to 6.1
per cent in 2008 and 5.6 per cent next year. In most of these
countries, consumption is being stimulated by high pay increases and
a strong labour market, while investments are being nurtured by EU
structural funding and in Ukraine and Russia by pressure for change
and major public investment projects. Inflationary pressure, which is
largely due to rising energy and food prices, is nevertheless partly
eroding purchasing power. Somewhat tighter credit is dampening
demand.

Russia's strong growth will continue, supported by high commodity
prices and expansive fiscal policy this year as well. The investment
upswing will continue and will eventually ease capacity constraints.
Current government policies will remain in place after the new
president has taken office. Russia's dual leadership may lead to
tension ahead.  Ukraine's growth and inflation will remain at high
levels. The economic catch-up process from a relatively low living
standard and an expansive fiscal policy are sustaining growth.

"The biggest challenge to stabilisation policy in Russia and Ukraine
is high and rising inflation," says Bo Enegren of SEB Economic
Research.

Poland's high growth will cool to a sustainable level of 5 per cent.
Overheating risks will be cooled by lower global demand and continued
monetary policy tightening. Slovakia will grow fast and in a balanced
manner and will succeed in joining the euro zone in 2009. The Czech
Republic will implement growth-promoting reforms. The key interest
rate will be raised, eventually dampening strong inflationary
impulses. Hungary's economy is in a deep slump following fiscal
policy tightening and will rise slowly.



SEB is a North European financial group serving some 400,000
corporate customers and institutions and five million private
individuals. SEB has a local presence in the Nordic and Baltic
countries, Germany, Ukraine and Russia, and a global presence through
its international network in another ten countries. On 31 December
2007, the Group's total assets amounted to SEK 2,344bn while its
assets under management totalled SEK 1,370bn. The Group has about
20,000 employees. Read more about SEB at www.sebgroup.com.
_____________________________________________________
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.
Elisabeth Lennhede, Press Officer, SEB, tel. [phone],
E-mail: [e-mail]