Effect of the crisis
Photo: UNDP/Alijon Uldashev
Remittances to Tajikistan are at risk as migrant workers face restrictive immigration policies.
Among the developing countries, those in central and Eastern Europe and the Commonwealth of Independent States (CIS), are the most integrated in the global financial structure – with high levels of foreign exchange borrowing - and thus were the first to be hit by the collapse of the financial and banking system.  Virtually all the countries have been  affected ranging from the relatively wealthy new European Union (EU) member states, to the poor Central Asian countries like Kyrgyzstan and Tajikistan. Much of the progress in poverty reduction over the previous decade is at risk, which could complicate ongoing political processes, such as the consolidation of peace and stability in the Western Balkans.
The economic slowdown in the European Union will worsen the crisis as the demand for imports will be reduced, affecting countries like Slovakia that export 90 percent of their goods to the Union.
Foreign direct investment in Romania is expected to halve from the €9 billion, in 2008, to €4-5 billion. In addition, almost 9000 companies went bankrupt in 2008, representing a 65 percent increase from the previous year, and a further 1600 companies in January 2009.
In Turkey, the number of newly established businesses decreased by a third in January 2009 compared with January 2008, while unemployment increased by 2.2 percent in 2008, reaching 12.4 percent. In non-farm activities, the unemployment rate is much higher for women – 20.5 percent, compared with 14.1 percent for men. In the Russian Federation, the registered unemployment rate increased by 30 percent in urban areas and by 7 percent in rural municipalities already in December 2008.
Remittances to Kyrgyzstan, Tajikistan and Uzbekistan are at risk as migrant workers in Russia and Kazakhstan face restrictive immigration policies. These migrants come mostly from poor rural areas and their remittances represent the only or the most important source of income for their families left behind. In the Western Balkans, reduced remittances coupled with lower foreign direct investment and in some cases high current account deficits are expected to take a significant toll on the already difficult socio-economic situation.
The compounded water, energy and food crisis that is affecting Central Asia's poorest countries is now worsening due to the effects of disorderly currency devaluations and sharp reductions in household incomes and spending.
What are we doing?
UNDP offices are adapting their existing programmes to ensure protection for the most vulnerable. We are increasing employment-generation programmes and supporting the development of small and medium sized businesses.In addition, UNDP staff are working with governments to collect data, assess the impact of the crisis, and subsequently develop appropriate pro-poor policies to mitigate these effects. We analyze and address the linkages between the financial crisis, food and energy prices, human development and climate changes. Building on our knowledge networks and partnerships in Europe and the CIS, we bring together stakeholders to discuss and formulate regional responses to the crisis.