Impact of the Economic Crisis in Eastern Europe

This research paper investigates the differences in the various responses of 10 Eastern European countries to the first financial crisis shock in 2008-2009. While 2009 was a difficult year for all economies, some countries performed better than others: while Latvia decreased its GDP by 18% in a single year, the economy of Poland increased by 1.3% during the same period. While trying to explain the differences in economic performance during the crisis, we look at a large number of possible factors, such as government budget balance, government debt, current account balance, competition in domestic banking, and average growth in the year preceding the crisis.