The eruptions on the financial markets in the industrial countries are mind-boggling. Until recently, most emerging markets had coped pretty well. Then the liquidity crisis threatened to clobber them as well.

It is particularly annoying when you have money but are unable to spend it. Or to put it slightly differently: when spending it would trigger other negative consequences. This is precisely the unfortunate position Russia has found itself in for some years now.

The majority of the population still backs the political course being pursued by President Putin. For this reason, the presidential candidate Dmitri Medvedev, who is very close to Putin, is thought to stand a good chance of winning the election to be held in March and is expected to continue Putin's policies.

The financial market wobbles have now also reached Central and Eastern Europe and the emerging markets. Equities, currencies and risk spreads have come under pressure. How will the emerging markets cope with the current trends on the international capital markets?

The International Monetary Fund is urging the eastern European EU member states to create the conditions necessary for EMU membership as quickly as possible in order to introduce the euro. However, joining EMU is not on its own a safeguard against financial crises. On the contrary: in the event of such a crisis, it could probably be overcome more swiftly outside monetary union.

Some Central and Eastern Europe countries are conspicuous for their large current account deficits. Is this sustainable in the longterm?

Politics in the new EU member states has hit rough waters.However, the EU is acting as a stability anchor.

Portugal's economy is struggling to get back on its feet. Real GDP practically stagnated in the past four years and both the budget and the current account recorded whopping deficits. In 2005 the current account deficit amounted to no less than 9% of gross domestic product.

Russia’s economy is booming. Real GDP rose by no less than 6.4 % in 2005 and economic activity will not weaken noticeably this year either. Of course, growth is being driven first and foremost by soaring energy prices.

With effect from 28. 11. 2005, the Slovak Republic has joined the European exchange rate mechanism ERM II. A two-year membership, during which the currency concerned must not be allowed to come under permanent depreciation pressure, is one of the Maastricht criteria for joining European monetary union and, thus, for introducing the euro.

In no other world region does the commodity oil play such a dominant role as on the Persian Gulf. With the oil they exported in 2004 the Gulf states could satisfy Europe’s entire oil consumption. Their pre-eminent position is further underpinned by their formidable oil reserves, which make up almost 45 % of all known oil deposits. What is more, production costs are extremely low in comparison to other oil-producing regions.

Having joined the EU, the next step for our eastern European neighbors is membership of EMU. Hardly anyone disputes that this will occur, the only question is when.

Together with gloomy company news, the Federal Reserve's 25 basis point interest rate hike of 22 March 2005 caused something of a stir in the emerging markets.

The political turbulence in Ukraine has also taken its toll on the country’s economy. As long ago as last October – i.e. before the presidential elections that unleashed the political debacle – the National Bank had lost USD 1.4bn of its foreign exchange reserves in currency market interventions to shore up the grivna.