 we're going through very difficult times in this region and it's not immediately clear what the way out of this stagnation or recession is for the region. So that's really what the book is about. And so I'm going to just wave the book again. It's a volume published by my St Antony's College at Oxford. There is a group within St Antony's College called Seesox out these European studies at Oxford and I have a link, I'm a Seesox associate in addition to my work at the EBRD. So I'm one of the editors of this volume and I have a chapter in it as well. So I'm going to focus my remarks around this volume and with the help of a few charts and try and convey the main points and then come up with some conclusions at the end. Okay, now just to emphasize that the region I think does need a new reform agenda. The current short-term growth outlook is very weak for the region. I think the traditional macroeconomic policy levers, fiscal and monetary policy, there's very little or no scope for using them to try and boost growth. The banking system I think is still vulnerable to some extent, although I would say that it has actually coped remarkably well with the last four or five years of economic difficulties but it cannot be the driver of growth that it was before the crisis. So there is really I think a need now to look at some deeper structural reforms and I think if those problems that I think were overlooked during the pre-crisis boom years, if those problems can be addressed then I think the region can get back to sustainable growth. So although indeed I was the author of this epilogue that Tony started off by quoting and we're joking it must have been a bad mood when I started the first paragraph but by the end of the epilogue I think we, you know, I did say and we do believe I think that the editors and authors of this book that that this region can get back to, get back on the growth path and it can be a more sustainable growth model in the future. A few more words about the book, it's just published, we had an event at Oxford about three weeks ago and so a formal launch. It is available on the Seesawks website, it can be downloaded for free, it's not a very large volume, it's about 110 pages so not too much of a burden on your printer. The authors are a mixture of some people from the region, so a couple of academics, one from Bosnia and Herzegovina, one from Serbia, also a chapter by the governor of the National Bank of Albania, Ardion Filani and his head of research and then there are a couple of chapters, one by myself and a colleague from the IBOD and one by two IMF colleagues and the chapters cover the five themes listed there in the third bullet, so the political economy, the region competitiveness, trade openness, financial sector issues and financial constraints and foreign direct investment and of course with different authors it's not so easy to identify common themes but I think one theme that doesn't emerge is that the region needs, partly because of the evident weaknesses now of the European Union, the region and the individual countries need greater domestic ownership of the reform process but also within regional context and by that we want to emphasize that the more countries within the region can cooperate and portray themselves to the world as one common region rather than lots of little countries that happen to be beside each other, that then I think the better their prospects for attracting investment and ultimately getting back to economic growth. Okay, so with that preamble let me, the rest of my presentation will mainly be some charts, some familiar although updated from previous presentations I've given here in the institute, so I just want to show you two charts first to highlight the the current malaise, one is the current, oops I've gone too fast, the current growth outlook, so what this chart shows you is our current forecast is actually that it should be from January 2013 not 2012, so we update every quarter and we'll be updating again soon but it shows you our 2011 growth, our estimates at the moment for 2012, some of these numbers are provisional and subject to change and our current forecast for for 2013, the countries above the line are those that still manage some growth in in 2012 although with the exception of Kosovo and to a lesser extent Albania it was pretty minimal, the ones below the line are those that had negative growth last year and Croatia and Serbia both were around minus two percent, so in every case growth in 2012 was below 2011 so whereas in 2011 we seem to have a you know bit of recovery taking place, 2012 was a very very difficult year, now for 2013 we do have a you know we've penciled in a positive number in in each case but it's you know it's well below I think what the potential of the region is, it's we're talking about typically one one to two percent or maybe less than one percent in some cases with a lot of downside risks so don't be too surprised if later in the year you check the EVOD website and you see our forecast, let me put it this way they're more likely to move in a downward direction than than an upward direction so it's just it's hard to see really strong growth drivers anywhere in in this region and one of the reasons I think an explanation with that but also a reflection of it is the lack of confidence so in some countries we have monthly consumer and business surveys, it tends to be the EU members so Bulgaria, Romania, Croatia of course which is about to join for business confidence, we also have Macedonia on the right hand side we have Albania which I've put separately because it's a different methodology but what I would emphasize in these charts are the weakness of consumer confidence that's the upper left chart there and the blue or blue or green line on the top that's the EU average so consumer confidence is not very high in the EU not surprisingly as a whole but it's even lower in Bulgaria and Romania and Croatia looking at business confidence down on the the lower left hand quadrant there it's a bit more mixed it's you know it's below the long-term trend but it's not that different actually from the EU average if you can disentangle those different lines and Albania both are on a downward trend at present so Albania is a country that managed to escape the worst effects of the crisis but I think is nevertheless in in in quite some economic difficulties as well so that's the that's the background it's a bit of a gloomy story and now let me take you through some charts that highlight some of the points from the the chapters now the first chapter one of the this is by Boris Bagovich from the University of Belgrade one of the points he emphasizes is the the role of vested interests that vested interests throughout the economy and throughout society were made very powerful in in Serbia and in in the wider southeastern european region and that can be a big deterrent to reform and investment and growth so to illustrate that you can you can look at where countries stand on the Transparency International's corruption perception index and this index may be familiar to some of you it ranges from 0 to 100 so 100 would be basically no corruption 0 would be complete and utter corruption you can see there's a relatively minor variation in the region and the scores countries get Croatia comes out best Albania and Kosovo look the worst but all are well behind the OECD average so it's one way I think of illustrating this problem of this political economy problem of corruption and we know from numerous academic studies that corruption is is a serious barrier to investment and investment and growth now the second chapter is the one that I wrote with my colleague Simone Zay and it's it's about competitiveness and what we're trying to do in this chapter is to assess how competitive the region is on on a number of different indicators indicators of business environment quality of infrastructure state of reforms and and so on and it's partly part of the reason for writing that chapter was expository there are many different indices out there which report to measure some aspect of of competitiveness of the business environment or reforms and and what we're trying to do is explain what these different indicators mean and and and what sort of what sort of judgments one should infer from the from the scores so it's it's an eclectic eclectic mix of different indicators this one is from the World Economic Forum it's the global competitiveness index again the higher the score the the better and you see very little variation within the region Bulgaria stands out on on top Serbia and Albania and Bosnia all scoring least well but again on the right hand side you see the average for the the OECD which is significantly above the regional average so the region this week the southeastern europe is lagging behind why well we think it's partly because of institutional gaps and gaps in structural reforms and on this chart I'm showing something from the EBRD transition report which I can wave as well again probably a familiar publication to many of you our annual assessment of the economy and state of reforms across the whole EBRD region published every year in November within this volume you will see an assessment for each country of the state of reforms across 16 different sectors of the economy and what we have is a scoring system which goes from 1 to 4 plus with with or 4.3 3 with 4.3 3 being the the the highest score now this is done just for the transition countries so the comparator here on the left hand side is the the average for central europe and the Baltics and and then you see where our countries stand in our countries in southeastern europe so Romania, Croatia and Bulgaria being not that far short of the central european Baltic average and then there's quite a big drop when you come to the the rest of the countries with Bosnia and Herzegovina uh bringing up the bringing up the rear so that I think is one reason why southeastern europe is not as competitive as it could be and the other another reason is the quality of the business environment and for this we we have borrowed from the world world banks ease of doing business index it's another index that's published annually it assesses ease of doing business according to different criteria for pretty much every country in the world or at least 183 countries and one country stands out very well here that's Macedonia which is actually ranked higher than the average for OECD countries so at Macedonia for all its problems and all its difficulties it has made over the years a concerted effort to actually you know introduce concrete reforms to the business environment but the other countries you see lagging well behind and again Bosnia and Herzegovina is the one that stands out as the most difficult place to do business according to this particular measure now that I could show you the number of other charts from the chapter but I think the point that the point has been made that that there is a problem in the region with competitiveness with the state of reforms and with the quality of the business environment so this these are the things that need to be tackled now chapter three is by two IMF authors and what they focus on is is trade and and trade openness and they they particularly look at the export performance of the region and what they show is that this performance has been well below what you might expect for countries at this level of development now again there can be many reasons for this and some of them are partly a historical legacy of the breakup of Yugoslavia in the early 1990s and and the problems that that created in that decade but I think it also has to do with just the the general difficulties of trading across borders and this is another indicator that the World Bank examines each year in their doing business assessment and publish the statistics on and again you can see you can see how the countries rank in relation to the OECD average this is a ranking of countries so that the lower the score the better the ranking so number one would be the best 183 would be the worst in the world and you see each country in the region lagging behind the the OECD average so there is a fundamental problem and and indeed it's visible to the naked eye if you travel around the region by by road you can see visibly the problems on on the borders and the problems of of doing business with with neighbouring countries there has been progress over the years there is indeed a regional free trade agreement for those countries not yet in the European Union but there's a lot lot more to be done to achieve progress now chapter four is about financial financial sector and financial intermediation so this chart highlights how how steep has been the decline in in credit growth to the to the private sector so in the pre-crisis period so early 2008 you had very high credit booms pretty much across the board the one country that stands out here particularly is that one with 160% credit growth back in 2008 as Montenegro but other countries were having credit growth in the order of 40 50% a year so it's not surprising when you look back at it I mean here was a region where banks you know 10 to 15 years ago banks by and large were not really trusted people didn't want to keep their money in banks banks served no useful function as a provider of credit to businesses and so foreign banks in particular saw an opportunity they saw a region with potential a region that to a large extent put behind the political problems of the 1990s and one where there was really an opportunity to go in and do business and make money so foreign banks poured in they started making credit available to people people started trusting banks more and they also started borrowing more because they felt more confident about the future and you had a big credit boom now in the past few years that is all to some extent gone into root for us so credit growth now is bumping along marginally positive in some countries marginally negative in other words in real terms so when you're just for inflation it's actually negative in most countries so banks are to use the jargon word they're deleveraging they're cutting back on their lending and they're much more reluctant to lend than they were before why well one reason is because of these credit booms which was then followed by severe recession in most countries there's a big overhang now of non-performing loans what this chart shows is the percentage of loan books in the banking system that are non-performing bad bad debts basically it's above 10 percent in in all cases except Kosovo interestingly although even in Kosovo this they're starting to rise fairly sharply now and they're around 20 percent or even above in in a couple of cases Serbia and Albania in particular so so this is a this is a problem how are we going to how are banks going to deal with these loans are they going to write them off are they going to try and sell them off to npl servicing companies what can be done to solve this problem not an easy one to do but i think it has to be has to be tackled head on before banks will be willing willing to lend again now the final chapter is this is the one by this question set the financial sector one is written by Fika Chachovic from the university of Sarajevo final chapter is written by governor Filani and Alton Tanku from the bank of Albania and it looks at more broadly at regional cooperation and foreign direct investment and and this chart that i'm putting up here we don't have 2012 data yet so i've what i'm comparing here is the average foreign direct investment inflow during the five years before the crisis 2004 to 2008 compared with the average from 2009 to 2011 and in most cases it's been a steep drop Bulgaria and Romania the chart is truncated you can see the actual figures there is about a little over seven billion dollars a year in Bulgaria in the pre-crisis boom is more than nine billion a year in Romania now it's down to two little over two billion in Bulgaria and about three billion in in Romania in the three years of the crisis let's say 2009 to to 2011 so so the region is finding it hard to attract foreign investment and i think that is a is a really big problem because of course in principle domestic investment could step up and take up the opportunities but the resources for domestic investment are still quite limited so i think southeastern europe is a region that still needs not just the funds that come from foreign investment but also the the expertise the new products the new skills the new ways of doing things that are associated with with at least a good foreign investment and in a global environment when investment foreign investor appetite is is limited i think this hermit's home the point that the region has to do more to make itself attractive to foreign investors in the pre-crisis boom years is it was relatively easier to get foreign investment there are a lot of things to sell and and you could also sell a good story that the economies were growing quickly and and you could say well this is a region that's really on the now it's it's much harder to sell us to sell that story and there are fewer attractive actual assets to sell there are fewer things to privatize so you have to make more effort to get more greenfield investment and that is what ardean felanian alton tanku emphasizes the importance therefore of more regional cooperation to try and make the region more attractive to investors and not just individual individual countries so coming to some conclusions and then perhaps we can open up the the discussion i think therefore maybe that i've i've i've picked out one being i think a lesson that is well understood now that the the pre-crisis growth model in southeastern europe was it was unbalanced and it was ultimately unsustainable because it relied on cheap bank money credit booms cheap capital inflows and and that those things are not going to come back anytime soon now the second conclusion is and it comes through in some of the the chapters the the european unions anchor role for reforms it's still i think very important and in fact we we we say in the introduction that ultimately it's irreplaceable these countries need the european union perspective and indeed they are slowly but but surely making progress towards that girl cretia just yesterday they got the you know final green light from the european commission positive reports they are ready to join on july 1st and they will i think we can safely say now join on on july 1st and other countries by and large are making steps forward in in this process but the the the anchor role of the u as a as a guide to reforms and indeed the attractiveness of the u has diminished in in in recent years now that leads really to the third point that i think the the crisis was a bit of a wake-up call for the region one good thing that can come out of crisis is that they they can lead to a greater effort to reforms which reforms that will then put in place something more sustainable and that's less prone to crisis in in the future but it has to really come from domestic bottom-up support rather than than top-down and the final conclusion is that if the region can sell itself as a genuine one regional economic space or at least the more it can do that then the more chance it has of attracting foreign investment and and ultimately promoting economic growth i'm i'm so confident that will happen in the long term but it's going to take quite some time to to get there i hope that answers your question yes thank you