The special theme of the report is devoted to an analysis of the financial sector in the transition countries. Making use of several unique data sources, the Report looks at how financial systems have been restructured over the past 15 years, their impact on the economy and private sector development and the introduction of new financial services. Transition is being driven increasingly by competitive markets rather than by governments, particularly in the financial sector and in the mobile phone market. Strong economic growth has been maintained, and is forecast to reach 6.2 per cent in 2006. This is generated primarily by domestic consumption, though countries rich in natural resources are benefiting from high energy and commodity prices. Financial markets have grown in size and complexity, but there are weaknesses in the legal framework. Banks continue to dominate the financial sector, but stock markets, bond markets and a small private equity industry are becoming important elements of the financial system. Individual chapters cover: progress in transition; macroeconomic review; finance and growth; banking in transition; and private equity.
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