LOW DEBT COULD INOCULATE EAST EUROPE AGAINST FLU

LOW DEBT COULD INOCULATE EAST EUROPE AGAINST FLU

One of the worst nightmares of German exporters and investors is that their neighbor and growing market - Eastern Europe - might suddenly come down with a bad case of the Asian economic flu.

After all, the expected flood of cheaper Asian goods into Western Europe could cut deeply into Eastern Europe's own exports there, worsening the worrisome trade- and current-account deficits that already plague countries such as the Czech Republic and Poland.As U.S. Commerce Secretary William Daley said during a recent conference of the region's trade ministers in Prague: ''If anyone in Central and Eastern Europe thinks they are immune from what's happened in Asia, they don't understand what's happened with the world economy in the last 10 years.''

Even so, most analysts contend that Eastern Europe - while certainly greatly influenced by changes in the global economy - is less susceptible to the Asian flu than would appear at first glance.

To be sure, nations such as the Czech Republic and Slovakia would have trouble covering short-term foreign debt if their currencies suddenly were devalued as the result of a crisis. And Eastern European nations suffer from high deficits, over-valued currencies, weak banks and even weaker regulators.

However, economists say, Eastern European nations are less susceptible to a sudden financial crisis, because they have taken on less short-term debt than the Asian ''tiger economies.''

They also have maintained more practical currency policies and have avoided overextended lending. In addition, the economies of East-Central Europe are not as closely linked as those in East Asia.

In fact, Eastern Europe's most advanced economies might even benefit from the Asian troubles, attracting the interest of international investors who are now wary of Asia.