Brussels - The European Union's explosive expansion across Central and Eastern Europe in 2004 was an economic success, despite the financial turmoil now sweeping the region, the EU's executive said on Friday.

"The enlargement has emerged as a major success for the EU and its citizens ... It has greatly boosted the economies and improved living standards in the new member states, thereby also benefiting the old member states," the European Commission wrote in a report.

The commission's report was released ahead of the fifth anniversary of the enlargement on May 1. But it comes as new members across Central and Eastern Europe are struggling to cope with the global economic crisis.

Latvia and Hungary have already been forced to seek multi-billion-dollar rescues from the International Monetary Fund. This week, credit-rating agency Moody's sparked widespread financial panic when it warned of the risks to the banking market in the region.

Those risks were, in part, driven by the explosive growth which accession brought, the commission's report said.

"Foreign investment in the new member states surged fast ... However, in several countries, rapid and unchecked domestic credit growth, fuelled by foreign borrowing, overheated the economy and led to large external imbalances," it said.

But it rejected the idea that enlargement was to blame for those problems, saying they "are not unique to new member states; some of the old member states face similar problems."

Rather, the new member states are better positioned than their non-EU neighbours to weather the storm, because the bloc can give them both advice and emergency funds, it said. (dpa)