Coming in to land

摘要

Orthodox economics suggests that big current-account deficits, high inflation and fixed exchange rates are a lethal combination. But after a scary year, the east European countries that looked most likely to tumble seem to be heading for a softish landing. In Estonia growth has dropped from double digits to a mere 4.5%. In Latvia retail sales, rising by as much as 25% last summer, are growing by only 10%. The foreign banks that own most of the financial system in both countries have tightened lending. Even if some housing borrowers default, the pain is manageable.