(Adds quote, Czech forecast)
By Peter Laca
VIENNA, Jan 20 (Reuters) - Economic growth in emerging Europe will fall close to zero this year due to the global economic crisis, the European Bank for Reconstruction and Development said on Tuesday.
Governments, central banks and market watchers have slashed their forecasts for growth and inflation across central and eastern Europe due to the combined effects of the credit crunch, a slowdown in the real economy, and investors dumping assets.
"The whole region is under serious pressure," EBRD Chief Economist Erik Berglof told a conference in Vienna.
"Growth certainly is going to be below 2 percent and will be closer to zero than to 2 percent."
Last week the bank said growth of less than 2 percent would be the slowest for the whole region since the post-transition recessions that followed the fall of communism in the 1990s.
Berglof said he did not want to give specific forecasts until more data came in, particularly from regional heavyweight Russia. The bank has said it was cutting its previous forecasts expecting 3 percent growth in 2009, from an estimated 6.3 percent in 2008 and a record 7.5 percent in 2007.
The EBRD was set up after the fall of Communism to finance development projects in the former Soviet Union, Central and Eastern Europe and other countries in the region, with most funding coming from Western governments.
GOVERNMENTS WORRY
Berglof's comments followed forecasts from the European Union's executive Commission on Monday that sharply revised down growth outlooks for the bloc's new member states and raised budget deficit forecasts, which could complicate efforts to join the euro zone.
The deteriorating outlook has been accompanied by a stream of data showing a collapse in demand and production, as well as rapidly declining consumer price growth, all of which have prompted central banks to cut interest rates across the region.
In Prague, Czech Prime Minister Mirek Topolanek said the Czech economy could grow by 2.3 percent in 2010 but it was still unclear how much it would slow this year. "The Czech Republic will slow due to the slowing of export partners," Topolanek told an economic conference. "We can only worry how deep the economy will fall and how deep we get."
His statement followed last week's revelation of a 17.4 percent plunge in industrial output in November, the largest annual drop since 2001, while data earlier on Tuesday in the day showed retail sales for that month falling by 6.3 percent.
The European Commission sees Czech growth of 1.7 percent in 2009, from 5.7 percent in 2007, although some analysts say the Czechs could approach recession. It sees growth in Poland, the biggest economy of the EU's new ex-communist members, slowing to 2.0 percent this year, from 6.7 percent in 2007.
Also in Vienna, Serbian Deputy Prime Minister Mladjan Dinkic said growth in his country would fall to half of that from 2008 but Serbia would avoid a contraction.
In December, Serbia's government forecast economic growth of 3.5 percent for 2009, versus expected growth of around 6 percent last year. (Additional reporting by Gordana Filipovic and Jason Hovet, Writing by Michael Winfrey; Editing by Andy Bruce)