Early in 2009, most of the analysts had a fear that Central and Eastern Europe (CEE) was colliding toward a regional crash nostalgic of the East Asian crisis in the 90s.

Countries in Europe are expected to resume GDP growth in 2010. But projected growth rates in the CEE region’s primary export markets (Germany, France, Italy, Netherlands, Sweden, U.K.) are tepid and dependent on monetary stimulus programs whose effects will soon vanish. Growth of underlying consumer demand in Western Europe will remain weak in future years as the result of the Great Recession slowly unwind.

But the close connection between EU-15 and EU-10 economies also shows the degree to which the growth prospects of Central and Eastern Europe connect on the revival of the demand in Western Europe, which represents upwards of 80 percent of CEE exports.

The Great Recession did not have the successful elimination of these competitive assets. But the contraction of the CEE economies in 2008-09–and the expectation of modest growth rates in 2010 and beyond–has the potential to have more challenges of competing with China and other emerging markets that have already resumed strong GDP growth paths.