Eastern European Markets
September 6th, 2007

EME report commissioned by Sampo Bank indicates faster economic growth in Eastern European countries: Eastern Europe is catching up with the west

The economic gap between the EU15 member states and Eastern European countries continues to shrink. Eastern European countries' economies are growing on a significantly faster growth path, and these countries will reach the current standard of living of EU15 countries in 2028.

This is the finding of a new study carried out by ETLA, the Research Institute of the Finnish Economy, for Sampo Bank and Danske Capital, in which the long-term economic development of the Central and Eastern European emerging markets was analysed up to 2050.

The study predicts that the GDP per capita will rise from 36% to 87% of the EU15 average by 2050. GDP adjusted for purchasing power will increase nearly five-fold during this period.

Top incomes in 2050 projected for the Baltic countries, Russia, Hungary and Slovenia

According to Sampo Bank's study, the richest Eastern European countries in 2050 will be Lithuania, Estonia, Hungary, Slovenia, Russia and Latvia, which will exceed 90% of the EU15 countries' income level. Slovenia and Czech Republic have already surpassed the poorest EU15 country, Portugal, in purchasing power adjusted GDP per capita terms.

The various countries are developing at highly varying rates. Estonia will be the first to reach the current EU15 GDP level, already in 2019. At the other end of the scale are the poorest members of Eastern Europe – Bosnia, Albania and Georgia – which will not reach the current level until the late 2030s.

- The results of the study support our view regarding the increasing importance of the Eastern European economies for all of Europe. However, many institutional investors have not yet fully woken up to the potential of Eastern Europe. In investment portfolios, Eastern Europe is still considered to be one of the minor emerging markets, whereas the region should really be treated as a significant part of a European portfolio," says Karri Alameri, Deputy Managing Director of Danske Capital.

- In recent years Sampo Bank has increasingly emphasized central Eastern Europe and Russia in its Eastern European investments operations. Now we will bring to Sampo Bank clients also Danske Capital's celebrated Eastern Europe -products including mutual funds investing into the Balkan region. Danske Capital has operated in this region for several years already", says Kustaa Äimä, the head of Eastern Europe of Danske Capital.

In recent years, Sampo Bank and Danske Capital have placed great emphasis on investment operations focused on Eastern Europe. The first mutual fund investing in the Baltic countries commenced its investment operations in the late 1990s. Now all the Eastern European investment operations have been grouped in Danske Capital's Alpha East team, which manages around EUR 2 billion in assets in over 20 different funds (18 mutual funds and 3 private equity funds). The international Alpha East team is composed of experienced portfolio managers and analysts who specialise in Eastern investment and are stationed in Helsinki, Tallinn, Copenhagen, Vilnius, Sofia and Sarajevo. EME-report

About the study
* The study concerns the economic growth of 21 central and eastern European countries (emerging market economies, EMEs) from the beginning of the 1990s, in particular the growth outlooks of these countries up to 2050 in relation to the development of the EU15 countries. The study was commissioned by Sampo Bank and Danske Capital and was carried out at ETLA, the Research Institute of the Finnish Economy, by Ville Kaitila, Kari Alho and Nuutti Nikula. It is entitled "Growth Prospects of Emerging Market Economies in Europe – How Fast Will they Catch up with the Old West?" and is available in its entirety at: and

About Sampo Bank and Danske Capital
Sampo Bank and Danske Capital are part of Danske Bank. Danske Capital is Danske Bank's asset management unit and one of its areas of specialisation is Eastern Europe. Sampo Bank is a bank serving Finnish customers.

Further information
Karri Alameri, Deputy Managing Director, Danske Capital,
tel. +358 (0)10 246 5320
Kustaa Äimä, Head of Eastern Europe, Danske Capital,
tel. +358 (0)10 236 5060
ETLA’s researchers: Ville Kaitila, tel. +358 (0)50 410 1012 ja
Kari Alho, puh +358 (0)50 365 3309 and

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