Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
President Trump’s attempts to reset relations with Russia have led some to suggest that he may be attempting to break apart the Sino-Russian alliance as Nixon did in the early 1970s (although in Nixon’s case, by reaching out to China). But while this may …
27th February 2025
This Update answers some key questions on the recently agreed US-Ukraine minerals deal. In short, estimates of Ukraine’s mineral wealth seem to be overblown and the deal suggests that US support for Ukraine under Trump is likely to come with strings …
26th February 2025
GDP growth in Russia came in stronger than most expected last year at 4.1%, but this was accompanied by significant overheating and policymakers lost control of inflation. We think the period of rapid growth will give way to a slowdown in 2025, but the …
13th February 2025
The latest CPI data out of Central and Eastern Europe (CEE) have been stronger than expected, and leading indicators suggest that inflation across the region may be higher than we previously anticipated this year. We have revised up our interest rate …
12th February 2025
Notwithstanding negative FX returns and a challenging external backdrop brought about by Donald Trump’s agenda, we think Turkish bonds and equities will continue to perform relatively well in 2025, as the continuation of orthodox policymaking in Turkey …
5th February 2025
This weekend’s US trade policy announcements and Trump’s threats to impose tariffs on Europe raise the question of whether there is a bigger risk to the euro-zone than we had thought. This Update recaps on four key points about how the euro-zone economy …
3rd February 2025
The Israeli cabinet’s decision to delay a vote on approving the ceasefire with Hamas adds a high degree of uncertainty as to whether it will take e ffect on Sunday, as intended. If a ceasefire can stick, it could lead to a sustained improvement in the …
16th January 2025
A flurry of elections are due across Central and Eastern Europe (CEE) over the next year or so, which will provide a gauge of support for Ukraine and, in some cases, will shape countries’ future relationship with the EU. Fiscal risks will also be in the …
15th January 2025
Poland’s public debt dynamics are more favourable than many of its peers. But the sharp widening of the budget deficit, coupled with the decision to leave austerity measures until next year and beyond, suggests that it will be challenging to get the debt …
14th January 2025
The Cold War was defined by geopolitical blocs – the Soviet or Eastern bloc against the Western bloc. Geopolitics retreated with the collapse of the Soviet Union. The period from the early-1990s to the early-2010s was instead an era of globalisation: most …
7th January 2025
The latest inflation figures out of Turkey have given us more encouragement that the disinflation process is underway and that the central bank could lower interest rates towards 30% by year-end. Even so, real interest rates will need to be kept …
The termination of European imports of pipeline natural gas from Russia via Ukraine will only increase the EU’s dependence on imports of LNG and ensure that energy prices there remain much higher than in the US. The latest rise in EU natural gas prices …
2nd January 2025
Risks to Russia’s macroeconomic stability are mounting on the back of the recent credit boom and sharp rise in interest rates. Our EM financial risk indicators show that Russia is now at high risk of a banking crisis. We don’t expect these risks to …
12th December 2024
While energy market fundamentals point to oil prices falling a bit further and prices of European natural gas and Asian LNG remaining higher than before the Russia-Ukraine war, the uncertain geopolitical backdrop is a major wildcard for energy markets. Of …
3rd December 2024
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
29th November 2024
The economic impact of the Israel-Hezbollah ceasefire hinges on whether the deal holds and whether it sets the stage for a broader de-escalation of the regional conflict. If it does, that would allow Lebanon’s shattered economy to recover and ease fiscal …
27th November 2024
President-elect Donald Trump’s first threatened tariffs since the election are designed to extract concessions on drug trafficking and illegal border crossings, which means it may be possible for the countries targeted – Canada, Mexico and China – to head …
26th November 2024
Donald Trump’s re-election has changed perceptions of how the war in Ukraine will develop, with many hoping for a quicker end to the conflict. This Update looks at how the war might evolve and the economic implications for Russia and Ukraine, for Europe …
14th November 2024
Inflation figures out of Turkey – including those published for October yesterday – have surprised on the upside and forward-looking indicators suggest that the disinflation process will be slow in the coming months too. Consensus expectations for the …
5th November 2024
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
24th October 2024
Israel’s economy is under strain from the conflicts in Gaza and Lebanon, with supply constraints both holding back growth and causing inflation concerns to build. The softer-than-expected inflation figures for September released today will provide some …
15th October 2024
The 2025 draft budget recently outlined by Russia’s finance ministry shows that, rather than falling next year as initially planned, defence spending will rise by more than 20% to hit 6.2% of GDP. While personal income and corporate tax hikes will help to …
3rd October 2024
The strike by Israel in Lebanon that killed Hezbollah’s leader represents a major escalation of hostilities in the Middle East and all eyes are now on the next actions by Israel and Iran. On its own, this escalation would point to higher oil prices and …
30th September 2024
CNB cuts by 25bp again, easing cycle has further to run The decision by the Czech National Bank (CNB) to cut its policy rate by a further 25bp today, to 4.25%, was followed by communications which, on balance, felt a bit more dovish than at the last …
25th September 2024
Easing cycle resumes ... for now The communications accompanying the decision by the Hungarian central bank (MNB) to resume its easing cycle today suggests that the central bank could pause interest rate cuts again very soon. We expect just one further …
24th September 2024
The Fed’s upcoming monetary easing cycle will probably provide less of a tailwind to EMs than is widely thought. While it’s likely to give some central banks (such as in the Gulf, Mexico and Indonesia) a green light to lower interest rates, EM rate …
12th September 2024
Rates left on hold, easing cycle will be more “stop-start” from here The Hungarian central bank (MNB) suggested that its decision to leave the policy rate on hold today, at 6.75%, was likely to mark a temporary pause in the easing cycle, rather than an …
27th August 2024
The global macroeconomic risks surrounding a possible ceasefire deal between Israel and Hamas are asymmetric. An agreement – while having significant economic consequences for countries in the region – would probably not itself be a game-changer for …
19th August 2024
Israel’s economy slowed more than expected in Q2 as weak investment and supply constraints continued to hold back activity. A ceasefire to halt the conflict in Gaza would clearly be positive for the near-term growth outlook, but we doubt the economy would …
Signs of a thaw in frosty relations between India and China don’t point to a fundamental realignment in India’s position in a fracturing global economy. But they highlight a growing theme of some EMs tactically courting investment from China to put …
13th August 2024
Fears of a US recession have rattled EM equity markets at a time when EM economies themselves are showing more pronounced signs of weakness. Most EM currencies have held up well, suggesting a dovish tilt may come from EM central banks – particularly those …
5th August 2024
CNB slows easing cycle, but rates will still fall further than many expect Czech National Bank (CNB) Governor Michl sounded fairly cautious in his guidance about the future course of the easing cycle in the post-meeting press conference. But the …
1st August 2024
The rocket strike on the Israeli-occupied Golan Heights over the weekend has heightened fears of a full-blown conflict between Israel and Hezbollah in Lebanon. For Israel, this risks adding to pressure on its already strained public finances, and would …
29th July 2024
Easing cycle continues The Hungarian central bank (MNB) cut interest rates by 25bp again today, to 6.75%, and the post-meeting press conference suggests that, while there are some MPC members who want to pause the easing cycle, the balance is a bit more …
23rd July 2024
At first sight, the latest CPI data out of Central and Eastern Europe (CEE) might seem to provide central banks reason for comfort. But a look under the surface paints a more worrying picture: underlying core price pressures in some countries have re …
10th July 2024
Turkey’s economy has maintained strong external price competitiveness since the pandemic (mirrored by rapid export growth). But measures of competitiveness have shown a noticeable decline in the past year and will deteriorate further against a backdrop of …
9th July 2024
CNB cuts by larger-than-expected 50bp, but delivers hawkish guidance The decision by the Czech National Bank (CNB) to deliver another 50bp cut to its policy rate today, to 4.75%, was a dovish surprise to most analysts (although not ourselves). That said, …
27th June 2024
The G7 loan to Ukraine announced last week and the narrowing window to approve a new debt relief package once the payment suspension with private creditors ends in August has shone the spotlight on Ukraine’s large external financing needs. This Update …
20th June 2024
The European Commission’s recommendation to open the Excessive Deficit Procedure (EDP) against Poland, Hungary and Slovakia for breaching the EU’s fiscal rules won’t force a drastic change in policymaking, nor will it deal with the structural factors …
19th June 2024
Easing cycle slows again, limited room for rate cuts in H2 The communications accompanying the decision by the Hungarian central bank (MNB) to cut its base rate by a smaller 25bp today, to 7.00%, were fairly hawkish and support our view that the base rate …
18th June 2024
Having lagged behind other emerging market (EM) currencies for most of the post-pandemic period, the Polish zloty has lead the pack over the past six months. While we think that most of this rally has now run its course, we expect the zloty to stay …
3rd June 2024
Sovereign bond yields in Russia have surged to multi-year highs this year as markets have increasingly questioned the trade-off between the war effort on the one hand and policymakers’ ability to maintain fiscal stability and control inflation on the …
29th May 2024
Croatia has established itself as one of the fastest growing economies in the EU and we think that it will maintain GDP growth of around 3% p.a. over 2024-26. Income convergence – which has been rapid in recent years – will continue over the rest of this …
23rd May 2024
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
The fiscal tightening steps announced by Turkey’s finance ministry today, which include a freeze on most public construction projects, will help to prevent the large budget deficit from widening even further this year and contribute to the rebalancing …
13th May 2024
Private sector savings surged in Israel during the pandemic and jumped again last year amid the war in Gaza. We estimate that those built up due to the war are equivalent to around 3.0% of GDP and could be used to fund consumption, particularly if …
9th May 2024
The decision by Turkey last week to suspend all goods trade with Israel until there is a permanent ceasefire in the war in Gaza is unlikely to have a major macroeconomic impact in either country, although Israel’s construction sector appears vulnerable …
7th May 2024
Slight hawkish shift at the CNB, but rates to fall further than most expect The communications accompanying the decision by the Czech National Bank (CNB) to cut its policy rate by 50bp again today (to 5.25%) were slightly more hawkish than expected, but …
2nd May 2024
