Eastern Europe and the former Soviet Union will see GDP growth slow to 3.3% in 2002 from 4.3% in 2001, according to the European Bank for Reconstruction and Development (EBRD).

Describing the region’s performance as "good but not exceptional," the bank’s regular report ahead of its annual meeting said surprisingly buoyant domestic demand and investment had enabled stronger economic growth than in most emerging markets.

Poland, Central Europe’s largest economy, will likely be its weakest performer, with growth of just 1.5%, up from 1.1% in 2001. "Much of the slightly disappointing overall growth for accession countries reflects very low growth in Poland," said EBRD Chief Economist Willem Buiter during a press conference. According to the EBRD, Poland, once the most dynamic economy in the region with average annual growth of 5.4% from 1994-2000, is being held back by restrictive monetary policy.

The solution lies in more reform according to the EBRD, and it believed there is a golden opportunity for many countries with membership of the European Union looming. In the case in Spain and Portugal membership entailed massive reform and subsequently higher rates of growth. The top reformer in the region is Hungary, the EBRD said.