Contagion saps Hungary's strength

Source: Globe and Mail

ROME — Eastern Europe is going from emerging-market growth story to economic casualty with alarming speed as the financial crisis spreads.

Hungary's insistence that it is no Iceland did not prevent the country's currency and markets from taking another battering yesterday. The International Monetary Fund has promised Hungary assistance if its financial situation becomes dire.

Iceland, Ukraine and Serbia are also being monitored by the IMF, and the agency is sending a mission today to Turkey. The last time the IMF bailed out a European country was in 1976, when soaring inflation rates forced Britain to take out a loan.

The Hungarian currency, the forint, fell last week to its lowest level in two years against the euro (Hungary is a member of the European Union but does not share the common currency).

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