Deficit Risks Loom

BMI View : The end of the regional recession, stabilisation of currencies and the sharp mitigation of external account deficits have significantly improved the sovereign risk outlook for emerging Europe. That said, wide fiscal deficits will come into increasing focus going forward, especially as a busy election cycle and a weak macroeconomic recovery are likely to continue adding pressure on budgetary dynamics through 2010 and 2011. As a result, we believe that successive upgrades in BMI 's emerging European sovereign risk ratings (SRR) as seen in Q309-Q110, are unlikely in the coming quarters.

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