Ex-Soviet bloc nations, including the Baltic states, have recovered faster than expected from recent economic turmoil.

But countries like Russia that have left key reforms undone remain vulnerable, the European Bank for Reconstruction and Development (EBRD) said in its annual transition report released on May 20. Growth in many countries across the region fell sharply following financial collapse in Russia in August, 1998, and amid instability in markets in the Far East and lukewarm economic performance in Western Europe. But positive growth is expected in all 29 former Soviet-bloc nations this year, according to the report—released during the EBRD's annual conference that was held over the weekend in Riga. Combined, growth for the entire region should reach 3.6 percent in 2000, up from 2.4 percent in 1999 and minus 1.1 percent in 1998; Estonian growth should rise from minus 1.4 percent in 1999 to 4 percent in 2000; over the same period, Latvia growth was expected to go up from .1 percent to 3 percent, and Lithuania's from minus 4 percent to 1 percent, the report said. The EBRD said a semblance of economic stability in Russia, an improvement in Western European economies and the reopening of trade routes in southeastern Europe following the Kosovo conflict were factors contributing to the recovery. But the report warned the region still faced risks, especially in Russia and most former Soviet republics; Eastern Europe, including the Baltic states, were on much firmer economic footing, the EBRD said. Russian gross domestic product growth would reach 4 percent in 2000, up from 3.2 percent last year and minus 4.6 percent in 1998; Turkmenistan would register 16 percent growth for this year, the highest growth rate of nations surveyed. But in Russia, Turkmenistan and many other resource-rich former Soviet republics, growth was spurred in large part by steep rises in commodity prices, especially of oil—masking a lack of fundamental reforms. The EBRD said that long-term growth in these countries could only be sustained by deepening reforms, improving tax collection, making economic policy more predictable and in general strengthening the investment climate.