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Autos now in the crosshairs The Trump administration’s announcement of a 25% import tariff on autos and some auto parts will have a particularly large impact on Hungary and Slovakia. Our detailed response on Thursday to the tariff news can be found here . …
28th March 2025
Erdogan alarms investors The arrest of a leading opposition politician in Turkey on Wednesday triggered a major sell-off in the country’s stock market and currency. Events are in flux at the moment, but there are three takeaways. The first is that the …
21st March 2025
Ceasefire proposal met with resistance by Putin The US proposal for a 30-day ceasefire in Ukraine has been met with a mixed response in Russia, with President Putin saying that he “supports the idea” but that it needs “serious reworking”. The ceasefire …
14th March 2025
The agreement reached this week by the German government’s likely next coalition parties to reform the national fiscal rule suggest they will implement a significant fiscal stimulus over the next two years, which we think could lift German GDP growth by …
7th March 2025
President Putin this week described Moscow’s initial contact with the Trump administration as “inspiring a certain degree of hope”, and we think that the recent thawing in US-Russia relations has increased the probability of the war in Ukraine coming to …
28th February 2025
Europe scrambles amid warming US-Russia ties The plans announced by the US and Russia to improve relations and seek an end to the war in Ukraine have sent shockwaves across Europe and caught many off guard. The possibility that a peace deal is negotiated …
21st February 2025
Enthusiasm abound after Trump and Putin talk The phone call between Presidents Trump and Putin this week and comments by US Secretary of Defence Pete Hegseth caught many by surprise, particularly in Ukraine and Europe. The US and Russia have now agreed to …
14th February 2025
Hawks fly in CEE, but further rate divergence likely The communications from policymakers following central bank meetings in Poland and Czechia this week struck a hawkish tone. After leaving rates on hold , Poland’s central bank Governor Glapinski focused …
7th February 2025
Putin’s turn to up the ante We argued last Friday that President Trump’s comments on the war in Ukraine were likely to be met with a cold reception in Russia, dampening hopes of a quick end to the conflict. And an interview given by President Putin this …
31st January 2025
Trump ups the ante against Russia Comments by President Trump that he would tighten US trade and sanctions policy against Russia if Putin does not agree to negotiate an end to the war in Ukraine are likely to have been received with anger in Moscow. The …
24th January 2025
Israel & Hamas: an end to the war The ceasefire deal agreed between Israel and Hamas this week, if it sticks, would represent a major de-escalation in the region. It’s a multi-phase deal that will involve the exchange of hostages and prisoners, eventually …
17th January 2025
Trump softening his expectations on the war? Expectations for an imminent end to Russia’s war in Ukraine once Trump takes office as US President on 20 th January took a knock this week, following an FT report and recent comments from officials suggesting …
10th January 2025
Is Putin moving closer to a compromise? A lot of headlines from President Putin’s annual year-end press conference have focused on suggestions that he’s willing to make compromises to end the war in Ukraine. But it also remains clear that the two sides …
20th December 2024
Winner and losers from Assad’s downfall The fall of Syria’s President Bashar al-Assad last weekend is a monumental development after a period of 54 years in which his family had ruled the country. While there is still a high level of uncertainty over the …
13th December 2024
Another twist in Romania’s election rollercoaster Romania’s constitutional court unexpectedly announced today that it will annul the first round of the presidential election , which took place on 24 th November and saw independent far-right candidate, C …
6th December 2024
The ruble’s rollercoaster ride Donald Trump’s election victory has made some form of an end to the war in Ukraine more likely. (For more, see here .) His appointment this week of Keith Kellogg as his Russia-Ukraine envoy also points in this direction. Mr. …
29th November 2024
Russia’s war in Ukraine escalates Tensions between Russia and Ukraine escalated this week, with the US shifting its strategy to give Ukraine the go-ahead to use Western-provided long-range weapons on Russian territory and Russia launching an …
22nd November 2024
Yet another week of disappointing activity data … The Q3 GDP data released out of Central and Eastern Europe (CEE) this week has only added to concerns about the health of the region’s economies. Poland’s economy contracted by 0.2% q/q , while GDP …
15th November 2024
End to the war in Ukraine in sight? One of the most important channels through which Donald Trump’s victory in the US election could affect Emerging Europe – and the global geopolitical landscape – is if he seeks to end the war in Ukraine, as he pledged …
8th November 2024
CEE struggling, Hungary in a league of its own The Q3 GDP data out of Central Europe this week continued a bleak run of activity data for the region. The Czech economy grew by just 0.3% q/q – in line with our forecast, but some way below the central …
1st November 2024
Has Poland’s consumer recovery gone into reverse? The downside surprise in Polish retail sales data this week was the biggest at any point in the past decade. (See Chart 1.) In contrast to expectations for a slight slowdown in growth to +2.0% y/y in …
25th October 2024
External developments: the good, the bad & the ugly The current account data released across the region over the past week show that external positions have continued to improve in some countries (notably Turkey), while in others they are deteriorating …
18th October 2024
Some encouraging signs in the latest CPI data The batch of September inflation data out of the region this week offered some welcome signs for central banks. In Hungary, the headline rate fell to 3.0% y/y – its lowest rate since January 2021 and slightly …
11th October 2024
Israel’s economy has frequently bounced back from conflict throughout its history, but developments over the past week have raised the risk of permanent scarring to the economy from the ongoing hostilities across the Middle East. The latest ratcheting up …
4th October 2024
Fiscal risks in Romania continue to build Romania’s fiscal watchdog this week warned that the country’s budget deficit could come in at 8.0% of GDP this year. This is significantly above the government’s original target of 5.0% and also above its new …
27th September 2024
Storm Boris floods Central Europe The flooding in Central Europe over the past week has been described as the worst in the region in the last two decades and our thoughts are with those affected. The most heavily impacted areas have been in Poland, …
20th September 2024
The ECB’s easing cycle continued this week and the first Fed rate cut is just around the corner, but we still think that central banks in Central and Eastern Europe (CEE) are now at the beginning of a slower phase of their easing cycles and will loosen …
13th September 2024
Turkish officials expecting a goldilocks rebalancing The medium-term economic programme presented by Turkey’s government this week highlights that policymakers remain committed to orthodox policies to deal with the country’s large macroeconomic …
6th September 2024
Further signs of fiscal complacency in Poland The Polish government’s draft budget for 2025 announced this week suggests that fiscal policy will be more expansionary than we had previously expected next year. While that poses an upside risk to our …
30th August 2024
Ukraine’s surprise incursion Ukraine’s incursion into Russia continued this week. Ukraine found a weak spot in Russian defences two weeks ago and mobilised resources to exploit it. The scale of the incursion is significant, with some suggesting that …
23rd August 2024
Poland the region’s star in Q2 Perhaps the standout feature of the data released in the region this week was the strength of Polish GDP in Q2. Output expanded by a bumper 1.5% q/q, its fastest pace since Q1 2022. (See our initial take here .) The data …
16th August 2024
US recession fears grip global markets ... The turmoil in global financial markets late last week and early this week has been followed by some stabilisation over the past few days, but the situation remains fluid and you can find all our analysis on the …
9th August 2024
We will be holding a Drop-In next Thursday at 15.00 BST discussing financial risk across the EM world. Register for the 20-minute online briefing here . Tensions in the Middle East rising after Israeli strikes The rocket strike on the Israeli-occupied …
2nd August 2024
Ukraine reaches a deal Ukraine’s government agreed a preliminary deal on Monday with a group of private creditors to restructure $20bn of its external debt. As part of the deal, Ukraine will receive a 37% haircut on its bonds, and the average maturity …
26th July 2024
External positions in good health ... Romania aside Balance of payments data released across the region this week showed that current account positions generally deteriorated in May. Poland recorded a monthly deficit of €63m, while Czechia had an external …
19th July 2024
Narrowing in Hungary’s budget deficit may not last Hungary’s government announced a new set of measures this week to increase tax revenues and to avoid the budget deficit slipping below its target this year. The government said that firms that have …
12th July 2024
Hawks rule the roost Inflation data out of the region this week as well as comments from central banks strengthen the view in our recent Outlook that interest rates are likely to be hiked again in some places (Russia) and kept on hold for longer than most …
5th July 2024
How could the French election result impact CEE? The surprise decision by French President Macron to announce early parliamentary elections (with the first round taking place this Sunday) has led to a period of turbulence in European bond markets. The …
28th June 2024
Space for interest rate cuts narrows across CEE The Hungarian central bank’s decision to opt for a smaller 25bp interest rate cut at its meeting this week fits into a broader theme of policymakers in several parts of the EM world moving towards a slower …
21st June 2024
EU announces new tariffs on China The immediate macroeconomic impact of the EU’s new tariffs on EV imports from China announced this week are likely to be fairly small. As we noted here , the EU imported 440,000 EVs (€9bn) from China over the past year. …
14th June 2024
CBRT reserves on the rise The rebound in Turkey’s FX reserves in the past two months, alongside the sharp reduction in the central bank’s FX swap programme, has taken the CBRT’s net FX position into positive territory for the first time in four years. …
7th June 2024
Russian tax hikes: important but not large enough The tax hikes announced by the Russian finance ministry this week will help to plug the hole created by the growing military budget, but won’t deliver the scale of fiscal tightening needed to stop the …
31st May 2024
Still too early for nominal TRY appreciation The Turkish lira has been surprisingly stable over the past two months and Finance Minister Simsek noted this week that the currency would have actually appreciated had the central bank not been buying dollars …
24th May 2024
Putin’s political shake-up and meeting with Xi There were two big developments in Russia this week. The first was the cabinet reshuffle, in which long-serving defence minister Sergei Shoigu was replaced by economist Andrei Belousov. A lot of ink has been …
17th May 2024
Hungary straddling US-China divide Chinese President Xi’s visit to Hungary this week was the first by China’s head of state in 20 years and led to the establishment of an “all-weather partnership” between both countries. There are advantages to this …
10th May 2024
Battle of the survey data ... ESIs vs the PMIs The two survey measures of activity released out of Central and Eastern Europe (CEE) this week appeared to offer quite different insights into the performance of the region’s economies at the start of Q2. …
3rd May 2024
US aid package a (large) sticking plaster for Ukraine The $61bn US aid package for Ukraine approved this week will provide a much needed boost to Ukraine’s efforts on the battlefield, but the delays that the funding has faced over recent months casts a …
26th April 2024
Tensions increase, but hopes for de-escalation Tensions between Israel and Iran ratcheted up this week as both sides launched military strikes at one another, raising concern about a broader regional conflict. (Read our research here .) Following Iran’s …
19th April 2024
Oil price rally a headache for most in EM Europe... The price of brent crude oil continued to hover around $90pb this week, near its highest level in six months, as geopolitical tensions in the Middle East added to fears over oil supply. For most …
12th April 2024
Fiscal risks building in parts of CEE The larger-than-expected 2023 budget deficit figures released across parts of Central Europe this week underline our concerns about the fiscal challenges facing the region, particularly in Hungary. The better news …
5th April 2024
