According to a report recently released by The Economist Intelligence Unit 'World Outlook 1998', Eastern European countries will expand by 4.1 per cent, compared with a growth of 2.3 per cent in 1997 and just 0.1 per cent in 1996. The report says that the gross domestic product (GDP) in those countries will accelerate more strongly than at any other time since the end of communism. In the forecast for 1998, the top six positions among the 20 ranked economies in the world in terms of growth rates are Central and Eastern European economies. Bosnia is the highest with output expected to grow by 35 per cent, followed by Albania 12 per cent and Georgia 10 per cent. Turkmenistan is expected to be the worst performing former Soviet Republic, with their economy predicted to shrink by 2 per cent.

During a conference in Chisinau, the Moldovan President, Petru Lucinschi, stated that the country did not record any economic growth in 1997. He said that it was a very difficult year for the economy, but much improved compared to 1996, when the GDP fell by 9 per cent and inflation was higher by almost 5 per cent, compared to 11.2 per cent in 1997.

According to the National Bank of Poland (NBP), the 1997 money supply increased by 28.8 per cent to 176.07bn zloty (US$5.03bn), which means a rise of 40bn over the past 12 months, 10bn more than NBP had forecast.

Following the visit of Gerard Belanger, Head of the International Monetary Fund (IMF), the IMF urged Poland not to loosen its fiscal policy in 1998 but to examine ways of lowering the budget deficit further, to below 1.5 per cent of the GDP planned for the year. Mr Belanger also said that the IMF wants the exchange rate of the zloty to become more flexible, applauding the NBP's decision to allow more volatility in 1997.

The Ukrainian government confirmed that it would undertake another reform of its grain producing sector in an attempt to increase market incentives, thereby enabling farmers to sell all their output at market prices through commodity exchanges.

In 1997 a number of positive results were achieved in Azerbaijan's economy. GDP increased to 5.3 per cent; capital investement reached $1.5 billion. Foreign investment became $1.2 billion. Foreign trade increased to $1.6 billion; export increased to 30 per cent in comparison to import. Income of population increased to 31 per cent. It is the best result among CIS countries. The share of private sector in GDP increased from 15 to 40 per cent, and in production of agricultural products, to 80 per cent.

The Hungarian chemical producer, TVK Rt., has said that it is likely to reach an agreement on the 5bn forint ($24.4m) acquisition with the Austrian company Hamburger Unterland GmbH. TVK Rt. is trying to increase its production and sales in its plastics division following the recent purchase of the Romanian company Plastico S.A.

Rugogyar Kft. and its venture partner, the German Stahlschmidt company, completed the construction of a new cable plant in Hungary. The 200 million forint plant in Tatabanya in north-west Hungary will produce 300 million forints worth of cables for automobile manufacturers this year. The Hungarian company holds a 49 per cent stake in the venture.

In Poland, KGHM Polska Miedz witnessed the decline of the participation of foreign investors, who continue to sell their stakes in the major Polish copper producer. Initially, the overall share of foreign investors in KGHM was at 17.2 per cent, falling to 13.09 per cent over the last few months. This has been attributed to the decrease in copper prices worldwide, as well as to the general situation in emerging markets.

Russian gas giant Gazprom has warned that it will cut off gas supply to Poland if the country does not pay its $200m debt, said Rem Vyakhiev, President of Gazprom.

Danone, the French food company representing a large share of the food market in France, Italy and Spain, also holding a 20 per cent share of the Czech's dairy market, is to increase its 9 per cent share in the Slovak dairy market to 11 per cent by the end of 1998, said the company spokesman.

On 13 January in the Czech Republic, the Chamber of Deputies discussed a draft prepared by the Government on the Securities Commission Act, which is likely to become effective from April this year. The law sets up the Securities Commission as a central state administrative body to supervise the capital market. It defines the Commission's powers and structure, regulating relations on the capital market as well as a number of legal aspects.

State owned petrochemical and refining company, Unipetrol, accepted a 74 per cent stake in loss making Chemicke Zavody Sokolov from the National Property Fund at no cost.

The National Property Fund transferred 19.57 per cent of steel maker Nova Hut to Credit Suisse First Boston, to help meet conditions for International Finance Corporation participation. The state share in the largest Czech steel plant, which last year aborted a plan to privatise a 19 per cent stake through Global Depository Receipts, was reduced to 52.54 per cent.

The largest Czech Bank, Komercni Banka, announced the bulk of the expected real estate it holds as collateral. The bank's share fell to a historical low of 1,007bn crowns ($27.9m ) following news that it had to increase provisioning by Kc 10.5bn from general provisions and profits.

Two of Estonia`s leading banks, Hansapank and Saving Bank (Eesti Hoiupank) are expected to announce their merger. The new bank with assets of $1.4bn, will work under the name of Hansabank.

Launched on 16 January in Poland was the Warsaw Stock Exchange, a futures trading on the blue-chip WIG20 index. The initial three and six months contracts will expire on 20 March and 19 June respectively and will be traded with the allowed price fluctuation at 5 per cent and initial price at 10 zloty ($2.8) per point.

Dutch brewer, Heineken, announced a public tender offer on 15 January for the share of Polish brewery Zywiec S.A. Heineken currently holds a 31.8 per cent stake in Zywiec and intends to increase it to 75 per cent. On 15 January Zywiec was priced on the Warsaw Stock Exchange at 275 zloty per share ($78.6).

The Polish State Treasury sold its 8.3 per cent stake in the confectionery producer Wedel to Pepsi Co., which owns 97.1 per cent of the company. Pepsi paid 200 zloty per share ($57.1).

The Cabinet of the Czech Republic presented to Parliament a draft law on the sale of state land, which is expected to facilitate early elections on 19 June. Prime Minister, Josef Tosovsky, said that the Cabinet would not change its decision to have mid-year elections.

Sergej Kozlik, the Slovakian Finance Minister, has been replaced by Miroslav Maxon. Sergeij Kozlik will concentrate on his role as Deputy Prime Minister, responsible for the coordination of the economic ministries and Deputy Chairman of the ruling Movement for a Democratic Slovakia Party (HZDS), in preparation for parliamentary elections due in autumn.

On 14 January the Ukrainian Parliament ratified a friendship treaty with Russia. Valery Pustovaitenko, Ukraine's Prime Minister, said the agreement would provide for a stable growth of trade relations between the two countries. Russia accounted for 47 per cent ($28bn) of Ukraine's trade in 1997. Last week both countries agreed to scrap value added taxes on their goods.

Vienna will host a two days conference (31 March and 1 April ) on Freight Transport & Logistics: Russia and the Commonwealth Institute of States (CIS), the Baltics and Eastern Europe. The conference will examine the latest developments and highlight the opportunities available to transport users and providers operating in the region.

Prague will host a four day conference (9-12 February) on Privatisation and Investment in the Czech Republic. The conference will focus on the macroeconomic trends, privatisation in the banking sector, and development of the financial sector and capital market.

Rates derive from the FT from 9 January 1998.
Rates for Georgia, Tajikistan, Turkmenistan, Uzbekistan are provided by the national banks of each country