CHAPTER 2

AT A GLANCE

As the eurozone sovereign debt crisis deteriorated, recovery has stalled in many countries of the transition region. Exports and capital inflows declined and the region’s banks have lost significant external funding from their eurozone parent banks. The region’s exposure to the euro area has thus recently turned from a benefit into a disadvantage, especially for central and south-eastern Europe. The outlook for the region continues to be crucially driven by developments in the eurozone crisis. In the baseline, the region will see a substantial slow-down this year and next relative to 2011.