Russians who used the offshore haven of Cyprus before the collapse of the island’s banking system appear to have shrugged off the Kremlin’s calls to bring back their money to the motherland, instead opting to park their cash in the British Virgin Islands, data from the Russian central bank suggest.

Russia’s direct investment to the British Virgin Islands increased nearly eightfold on a quarterly basis in the first three months of 2013, coinciding with Cyprus’s banking crisis, which saw Russian accounts in the Mediterranean country frozen.

Russian residents channeled $31.66 billion to the Caribbean U.K. territory in the first quarter of 2013, compared with $6.7 billion in the fourth quarter last year, the data from the Bank of Russia showed. By comparison, direct investment to Cyprus fell to $2.72 billion in the first quarter from $21.13 billion in the fourth quarter of 2012.

“This is a clear link to Cyprus. This could be explained by a change in offshore jurisdiction as Cyprus became less convenient for economic entities,” said Evgeny Nadorshin, chief economist with Russian conglomerate Sistema. Read More »

Central Europe’s three main economies are expected to have turned the corner in the second quarter with gross domestic product figures due en masse Wednesday showing the light at the end of the tunnel for the countries hit by the euro zone’s debt crisis.

The recovery is partly a result of steadily growing German economy, the largest destination for Central European exports, and also thanks to individual measures that these European Union members have used to tackle the effects of the European credit crunch.

The region’s largest economy is expected to have bounced back in the second quarter after nearly stagnating in the first, while the Czech Republic is foreseen to have ended its longest recession since the early 1990s with a quarterly expansion. Hungary is seen to have swung to an annual growth from a contraction a quarter earlier. Read More »

Slovenia’s parliament Friday approved constitutional amendments capping government budget spending and tightening rules on holding referendums on unpopular austerity measures as the center-left government of this small and financially troubled euro-zone country seeks to restore investor confidence.

Slovenia, formerly the best achiever among former socialist Eastern European countries, has raised concerns among investors of becoming another euro-zone bailout candidate.

Since 2009 the country’s economy has either contracted or stagnated, while local state-owned banks have been suffocated by massive debts. The three state-owned lenders, which together account for the lion’s share of the Slovenian banking market, shoulder 8 billion euros ($10.3 billion) of non-performing loans, equal to about one-fifth of the country’s total annual output.

Prime Minister Alenka Bratusek won approval for the constitutional amendment requiring Slovenian governments to maintain balanced budgets. The spending cap rule will become effective from 2015 despite Ms. Bratusek’s initial plan to delay it until 2017 as she seeks to jump start the local economy. Read More »

Poland’s finance minister Friday proposed new, more stringent criteria than European treaties require for gauging the country’s readiness to adopt the euro.

On top of the public-finance and monetary criteria set out by European Union laws, Jan Vincent-Rostowski said Poland should consider other benchmarks, such as credit-rating level, the unemployment rate and an ambitious public-debt target, before it can abandon the zloty.

“Maybe we should set up internal euro-adoption criteria, which would reflect our internal readiness to join the euro,” Mr. Rostowski said during a debate at the finance ministry. Read More »

The European Commission cut its growth forecasts for 2013 for eastern European Union members–which use their national currencies and have been growing faster than the euro zone–as the dire economic situation of the more vulnerable EU members spills over to the rest in the bloc.

The EU’s executive said Wednesday in its autumn report that out of the seven post-communist countries that are in the EU but outside the euro zone, six would grow slower in 2013 than expected in the Commission’s spring forecast.

Poland, the largest economy in the group, will grow 1.8% in 2013, the Commission said, a result comparable to the relatively weak performance of 2009, when the country was the only EU state to escape recession the immediate aftermath of the collapse of Lehman Brothers the previous year. The Polish economy is likely to face external headwinds coupled with sluggish domestic demand as consumers feel pressure from the labor market and the government limits spending to keep a lid on public deficit, the Commission said.

Poland’s central bank downwardly revised its own growth projections for the country on Wednesday and cut its interest rates, initiating an easing cycle that is likely to help the domestic economy, said Marek Belka, the central bank governor. The country’s economy is likely to slow to the range of 0.5%-2.5% in 2013, from 4.3% last year, and the risk that it will contract is very low, Mr. Belka said.

More exposed to the euro zone’s markets via trade, the Czech Republic and Hungary will grow 0.8% and 0.3%, respectively, after emerging from a recession this year, the Commission also said. Low consumption weighs on the Czech economy, while deficits there appear persistent, according to the EU’s executive. Read More »

For decades, the Turkish lira was infamous for volatility and hyperinflation: Turks would regularly spend millions on staples like bread, milk and cheese.

But now, Turkish news outlets are fizzing with debate about the possibility of a lira currency zone, following an ambiguous comment from Turkey’s outspoken Prime Minister Recep Tayyip Erdogan.

Speaking in Berlin late Tuesday to reiterate Ankara’s commitment to its faltering European Union bid, Mr. Erdogan appeared to propose that Turkey should set up its own currency bloc rather than entering the embattled euro area.

“Among EU members there are that say ‘I am against the euro, I will not join the Eurozone’… They even advise us, saying ‘don’t ever join the Euro zone, you can set up a Turkish Lira Zone. I say, I agree,” Mr. Erdogan said. Read More »

ISTANBUL — There was a time when joining the European Union was Turkey’s most-prized goal. Now, Turks don’t want to go anywhere near the bloc.

Support for joining the EU has dropped to a record low of 17% from 34% last year, according to a survey published Tuesday by the Turkish European Foundation for Education and Scientific Studies, or Tavak. What’s more, almost 80% of the 1,110 people polled in eight cities across Turkey in June said they didn’t believe Turkey would join the 27-nation bloc.

At the heart of it is Turkey’s strong economic growth, contrasting with the EU, which has seesawed in and out of recession amid a financial crisis during the past three years, said Faruk Sen, chairman of Tavak. Also fueling sentiment against joining the EU are repeated snubs from EU leaders against Turkish entry to the bloc and a feeling that the union is anti-Islam, he said in an interview on Wednesday. Read More »

Polish retail sales rose robustly in July, the country’s statistics office said Friday, but economists doubt the pace can be maintained amid the euro-zone crisis and deteriorating sentiment among Polish consumers.

Sales rose 6.9% on the year in July after climbing 6.4% in June. The annual sales increase was above the 6.5% forecast. Furniture and household appliance sales, which increased 18%, drove sales, as did sales of fuel and vehicles.

However, part of the increase was inflationary, said Bank Millennium, with fuels in particular priced much higher this year. And recent average wage increases were below the rate of consumer price inflation, which means households are using savings to keep their living standards unchanged, the bank said. Read More »

The Polish economy likely slowed in the second quarter to about 3% annually from 3.5% in the first three months of the year, and faces a slowdown next year amid the euro’s crisis, Polish officials said Wednesday.

The Polish economy is internally balanced, which is the main reason for its resilience in the face of the euro zone’s debt crisis, although “it’s hard to be unconditionally optimistic,” said Marek Belka, governor of the National Bank of Poland, who cited the 3% growth figure for the first quarter. Official statistics for the quarter will be released on Aug. 30.

The Polish economy grew 4.3% in 2011. Mr. Belka said relatively low debt levels of Polish businesses and households are among of the factors contributing to growth but the euro-zone banking and debt crisis will eventually take a toll. If the euro plunges into a severe recession, Poland won’t avoid a slowdown next year, said Poland’s Finance Minister Jan Vincent-Rostowski. Read More »

Hungary’s center-right Prime Minister Viktor Orban is counting on the conservative and Christian youth of the country to come up with solutions to tackling the euro-zone crisis and address Europe’s challenges as it undergoes a major reshaping.

The Continent’s west and east are on completely different trajectories, with the west dangerously close to entering a permanent debt trap, whereas eastern countries have their finances under control and even Hungary’s troubled economy is now back on track, Mr. Orban told an audience comprised of Fidelitas, the youth organization of his governing Fidesz party.

“Europe is currently facing a rearrangement far greater than what we now comprehend from our Hungarian, somewhat provincial perspective,” Mr. Orban said. Read More »