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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
This page brings together our analysis of how Donald Trump's return to the White House will affect the outlook for emerging economies. Use the Table of Contents on the right to navigate. All of our analysis on the election, including the implications for …
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
Rates on hold, CBRT sticks to hawkish message The decision by the Turkish central bank (CBRT) to leave its main policy rate on hold again today, at 50.00%, was widely expected, and the continued hawkish communications support our view that interest rate …
A strong end to Q2 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional growth strengthened at the end of Q2, with our regional-weighted measure of sentiment rising to a two-year high in June. …
Domestic demand driving the recovery The Polish activity data for May were a mixed bag with retail sales bouncing back, while industry suffered a renewed contraction. With domestic demand likely to stay strong over the coming months, we maintain our …
24th 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
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
Inflation rises further, another rate hike likely in July The further rise in Russian in inflation to 8.3% y/y in May was stronger than expected, and means that an interest rate hike at the central bank’s next meeting in July now looks all but certain. …
14th 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. …
With economic activity strengthening across Emerging Europe and inflationary pressures resurfacing in several countries, we think that the scope for monetary easing in the region this year is relatively narrow. Our interest rate forecasts in most …
13th 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
CBR sounds hawkish, rate hike becoming more likely Russia’s central bank (CBR) left its key policy rate on hold at 16.00% but delivered a much more hawkish message at today’s meeting. Inflation concerns are likely to persist for some time and we think the …
Overview – Activity strengthened across Emerging Europe in Q1 and we expect this to be sustained over the coming quarters, with GDP growth in most economies exceeding consensus expectations in 2024. This is likely to be accompanied by renewed inflation …
6th June 2024
Activity softens slightly, but still running hot Russia’s economy appears to have had a slightly softer start to Q2, with industrial production and retail sales growth both slowing in April. Still, the latest indicators for May have remained strong and …
5th June 2024
Rates on hold until 2025 Poland’s central bank (NBP) left its policy rate on hold at 5.75% today and policymakers are likely to maintain fairly hawkish communications as inflation rebounds in the second half of the year. We don’t expect the easing cycle …
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
Russia outperforming, CEE continues to struggle The manufacturing PMIs for May show a divergence in the region, with conditions improving slightly in Czechia and Russia’s economy continuing to boom. But industry weakened sharply in Poland and Turkish …
Inflation surprises to the upside, bumpy disinflation lies ahead The stronger-than-expected rise in Turkish inflation to 75.45% y/y in May (consensus 74.8%) is slightly disappointing. It had looked like price pressures were easing in recent months, but …
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
Acceleration in growth, with rebalancing under the surface The strength in Turkey’s economy in Q1 – GDP expanded by a whopping 2.4% q/q – was driven by a large boost from net trade while private consumption growth slowed sharply. This offers signs that …
Recovery in regional sentiment takes a breather The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in May and our regional-weighted measure edged down slightly. Even so, that still leaves …
30th May 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
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
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
Rates to stay on hold throughout the year Turkey’s central bank left its main policy rate unchanged at 50.00% again today and the statement continued to emphasise the need to keep interest rates high for a prolonged period. While the consensus view is for …
Retail sales disappoint Poland’s activity data for April revealed that retail sales growth softened a bit more than expected last month, but that the weakness in industry in March was just a temporary blip. On balance, we remain comfortable with our …
Economic growth strengthened across Emerging Europe in Q1, and leading indicators suggest that it has picked up further in most countries in Q2. With inflation likely to rise (or stay) above central banks’ targets in the second half of this year, the …
22nd May 2024
Easing cycle about to enter a slower phase The decision by the Hungarian central bank (MNB) to cut its base rate by 50bp again today, to 7.25%, will be followed by more cautious monetary easing over the rest of this year. We currently forecast just 100bp …
21st May 2024
Economy running hot in Q1, inflation pressures build further The 5.4% y/y rise in Russian GDP in Q1 was a touch stronger than expected and, taken together with the rise in inflation in April, adds further evidence to the view that the war effort is …
17th 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 …
This page has been updated with additional analysis since first publication. Activity rebounds, but net trade remains a large drag The 14.1% q/q annualised rebound in Israeli GDP in Q1 was slightly weaker than expected and left GDP almost 3% below its …
16th 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
CEE’s recovery moving into second gear The Q1 GDP figures released out of Central and Eastern Europe (CEE) this morning show that growth strengthened across most of the region at the start of this year, and we expect a further modest pick up over the …
Easing cycle delayed, cut pushed back to Q3 Romania’s central bank (NBR) left its policy rate on hold at 7.00% today, in contrast to consensus expectations for a cut but in line with our own forecast. With inflation pressures falling more slowly than …
13th 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 …
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
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
Rates on hold, small chance of a cut in 2024 Poland’s central bank (NBP) left its policy rate on hold as expected at 5.75% today and we don’t expect any change for some time. Still, there is now a growing possibility of an interest rate cut before the end …
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
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
Inflation pressures stabilising, rate cuts still some way off The slightly smaller-than-expected rise in Turkish inflation in April to 69.8% y/y (consensus 70.3%) offers encouraging signs that price pressures have softened again. The 3.2% m/m increase was …
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
On Tuesday we held a Drop-in on the outlook for the German economy. This Update summarises the key points that we discussed and answers some of the questions that we received during the event. 1. Do the Q1 GDP data mean Germany is out of recession? The …
This page has been updated with additional analysis since first publication. Industry dragging on the CEE recovery The weak set of manufacturing PMIs out of Central and Eastern Europe (CEE) for April suggest that industrial sectors remained a drag on the …
The Polish government’s white paper on Monday set out a scathing review of the previous government’s fiscal record and highlighted the challenges facing the public finances, but if we’ve learned anything from the report it is that the government will take …
30th April 2024
Recoveries continue The slightly better-than-expected Q1 GDP figures out of Hungary and Czechia suggest that economic recoveries had a little more momentum at the start of this year than we previously thought and that the risks to our growth forecasts for …
This interactive dashboard allows you to explore all of our forecasts and key data for economies in Emerging Europe. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right …
