Guy Norton in Zagreb -

### ebrd1.jpg ::: EU Commissioner Oli Rehn ::: main ###

In every life a little rain must fall. But the authorities in Zagreb must no doubt be wishing that on the occasion of the annual general meeting of the European Bank for Reconstruction and Development (EBRD) in the Croatian capital, the weather gods had looked more favourably on them.

In mid-May you could normally bet your favourite Hawaiian shirt on the Zagreb being bathed in sunlight, warming the hearts of the local café bar owners as thousands of well-heeled locals descend upon the city centre to drink, chat and indulge in Croatians' favourite hobby - posing their designer socks off. Unfortunately for the country's tourist board chiefs looking to lure some of the free-spending visitors to the EBRD jamboree back to the country, the meteorological reality was somewhat different. Hundreds of EBRD delegates more often than not were forced to run for cover as the heavens opened and temperatures plummeted. Thankfully, the monsoon-like precipitation held off long enough on the evening of the first day of the meeting on May 14 for the Croatians to make a decent fist of putting on a show worthy of the stunning surroundings of the Upper Town district at the government-sponsored reception.

But it wasn't only the weather that rained on the Croatians' parade: inside the conference there was an equally cloudy outlook for the country. According to research by analysts at Raiffeisen International, Croatia is on course to set an unenviable record in 2010, with the Balkan state set to be the only country in Central and Eastern Europe whose economy will shrink this year. Herbert Stepic, Raiffeisen International's chief executive, tried his best to lighten the doom by pointing out the fact that the country's pampered elite still seemed to boast more supercars per capita than your average hedge fund manager's nanny, but even he was forced to admit that he and the bank's economists had yet to fathom out quite what anybody in Croatia actually does for a living, beyond indulging in conspicuous consumption-focused spending binges that would put a Russian oligarch's latest squeeze to shame.

While Stepic touted the fact that Raiffeisen International's lending policies in the rest of the region were firmly focused on supporting productive industrial enterprises, he conceded that in Croatia it was still largely dedicated to helping to fulfill Croatians' automotive dreams. "Croatians are just crazy about cars," he confessed with some obvious bemusement. He could have added Louis Vuitton handbags, Rolex watches, Dsquared jeans and Gucci loafers.

In fact, the EBRD forecast for the whole region is none too hot. The EBRD revised up its average growth forecasts for the region to 3.7% in 2010 from the 3.3% it predicted in January, but said the various countries, "face an uncertain period of recovery out of the global economic crisis, with increasing differences in the pace of growth across countries, and new risks arising from fiscal pressures and financial volatility in Western Europe."

This upward revision reflects upgrades to growth in some of the largest economies in the region, including Russia, Turkey, Poland, Hungary, and Ukraine. However, growth forecasts in some other countries, such as Romania and Bulgaria, have been revised down. "Most countries are continuing to experience a slow recovery, and some face further output declines," it said.

This gloom might have not have settled so much on the delegates had the weather allowed Zagreb's finest sponzorusa (sponsor girls) to have been able to strut their stuff and show off what their boyfriends'/uncles' euro-denominated consumer finance loans had been spent on. But with the rain threatening to take on diluvian proportions, the sponzorusa and their pampered pooches were nowhere to be seen, leaving EBRD delegates to huddle under any available shelter outside the Westin Hotel, while trying to judge the most propitious moments to make an Usain Bolt-like dash for the nearest (overpriced) taxi on the search for an artic-standard fleece to fend off the threat of chronic pneumonia.

Country presentations

Meanwhile, inside the Westin Hotel the country presentations provided plenty of food for thought for those interested in studying the psychological state of different countries. Bosnia-Herzegovina's presentation threatened to descend into fisticuffs after it was suggested by one questioner that the Serbian part of the country is a far more investor-friendly destination than its Croat-Muslim counterpart. Those looking for evidence that Bosnia has a stable, prosperous multiethnic future would have found little reason for cheer.

Meanwhile, Russia continues to live up to Winston Churchill's maxim of being a riddle wrapped in a mystery inside an enigma. How a country with such an obviously bright economic future can contrive to stage a presentation that makes watching paint dry seem like a merciful release from mind-numbing tedium beggars the imagination.

In stark, not to say glorious, contrast, if the presenters on the panel for Azerbaijan had passed a hat around for cash contributions for the further development of the country's economy, even the hard-bitten hacks in attendance would willingly have emptied their wallets and pockets of every Croatian kuna they possessed after a super-slick country presentation that did much to brighten up the storm-lashed second day of the meeting.

Running Azerbaijan a close second in terms of being both informative and fun was the country presentation by Albania. EBRD representative Daniel Berg, ably assisted by the likes of Seyhan Pencapligil at Banka Kombetare Tregtare and Xhentil Demiraj from the finance ministry, helped to prove that given the right people and policies, even one-time basket cases such as Albania can be turned around eventually to the point where, despite short-term political uncertainties, the country is virtually assured of enjoying a brighter economic future.