The global financial crisis and its impact on Central Eastern and South Eastern Europe: the cases of Poland, Latvia and Romania.

Abstract

The recent global economic crisis shows how the globalization of the financial system has created a strong interrelationship and interdependence of economies. As a result of this development, a crisis that originally hit a specific part of the credit market, finally affected the world markets, forced the international financial markets to freeze and slowed down the global economic activity. It did not take much time to the economic crisis to spread to Central Eastern and South Eastern European (CESEE) economies where at first it hit the Stock and Capital Markets with a parallel sharp drop on exports and Foreign Direct Investments (FDI). The aim of this study is to identify the main causes of the recent financial crisis and to understand the transmission channels through which it spread to the CESEE region – in particular the economies of Poland, Latvia and Romania, the policies which these countries used in order to cope with the crisis as well as their perspectives, in the new economic and social framework which has been shaped in the European context.