After gas woes, Balkans economy outlook could worsen

By Gordana Filipovic

BELGRADE (Reuters) - A week-long cut in gas supplies has prompted concern that some Balkan countries already hit by the world financial crisis could see dimmer economic prospects and lower job numbers as a result.

Supplies to Europe have been cut off for almost a week in freezing temperatures after Russia turned off the tap to Ukraine in a long-running feud. Following a deal on Monday, the second in two days, gas supplies should restart on Tuesday.

The Balkans took Europe's biggest hit, with hundreds of thousands of households initially losing heat and dozens of businesses forced to halt production.

Analysts said it was premature to assess the impact on growth, but lower industrial output for the month of January was possible. The mid-term outlook depends on global economic conditions and the impact of falling global demand.

"Given lower demand, many firms have piled stocks in the last few months and I don't think demand or sales will suffer," Raiffeisenbank analyst Zdeslav Santic in Zagreb said.

"But some producers, like those of construction materials, may be forced to reduce or stop production which would lead to job losses," he added.

The economic impact could become more visible if the latest deal in restoring gas supplies hits a snag, especially for countries with little or no reserve, Vladimir Gligorov of the Vienna Institute for International Economic Studies said.

"Croatia has had its own reserves to rely on at the time of crisis, Bulgaria may not have sufficient gas reserves but they've got the European Union to turn to for assistance and Serbia has no reserves and no one to turn to," Gligorov said.