Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Industry resilient in Russia, Turkey and Poland The manufacturing PMIs for January were encouraging in Turkey and Russia and strong export performance continued to support Poland’s manufacturing sector. That said, there are further signs that prolonged …
1st February 2021
Vaccine hold-up threatens to delay recovery The growing tensions between the EU and AstraZeneca over COVID-19 vaccines threaten to delay the economic recovery we had pencilled in for Emerging Europe during the first half of this year. AstraZeneca …
29th January 2021
Figures consistent with relatively modest contraction in Q4 The 2.8% decline in Polish GDP over 2020 was the worst performance since the collapse of communism and is consistent with the economy contracting by around 1.3% q/q in Q4. While prolonged …
Third virus waves weigh on sentiment across the region The EC’s Economic Sentiment Indicators were mixed across Central Europe in January but broadly point to a weak start to activity in Q1. The services sector in particular continued to struggle amid …
28th January 2021
Industry booming and retail rebounds as virus restrictions eased Polish activity data for December showed that industry continued to boom and the easing of virus restrictions supported a rebound in retail sales, with the result being that any contraction …
25th January 2021
Russian inward FDI hits post-Soviet low The slump in FDI inflows to Russia last year underline how bleak the country’s medium-term growth prospects are. Figures released by the central bank this week show that Russia attracted just $1.4bn in FDI last …
22nd January 2021
Russia and Poland have been regional outperformers in recent months due the relatively light-touch containment measures in the former and the strength of export-orientated sectors in the latter. But Turkey’s recovery has come off the boil and strict …
Turkey’s central bank left its benchmark one-week repo rate unchanged at 17.00% at today’s MPC meeting as concerns about the faltering economic recovery took priority. But the hawkish tone on inflation supports our view that rates will be unchanged …
21st January 2021
The rollout of COVID-19 vaccines has slowly picked up across the region and we think governments will ease most restrictions by the middle of this year. But there is a clear risk that vaccine rollout progresses more slowly and that the bar for easing …
20th January 2021
Hungary side-steps EU to ramp up vaccination Vaccination programmes gathered pace across the region this week, with Turkey administering doses of China’s Sinovac vaccine and Russian President Putin ordering the mass vaccination of the population. But …
15th January 2021
Overview – Prolonged containment measures mean that activity in Emerging Europe will remain depressed for longer than we had previously expected. But the region is well-placed to access and distribute vaccines, which should allow activity to recover more …
14th January 2021
Recovery still strong in mid-Q4, but will struggle to make more headway Turkey’s industrial production and retail sales figures for November indicate that the economic recovery remained strong in the middle of Q4. But more timely indicators suggest that a …
13th January 2021
The shift towards orthodox policymaking at Turkey’s central bank has supported a rally in the lira and, so long as the policy shift sticks (as seems increasingly likely) and the external environment remains supportive, we think that the currency’s …
12th January 2021
Vaccination programmes struggle to take-off COVID-19 vaccination programmes have started slowly in the region and, with virus restrictions likely to be extended, or tightened further, economies will remain weak for a few more months at least. Russia has …
8th January 2021
Sentiment rebounds as virus restrictions ease The EC’s Economic Sentiment Indicators rebounded strongly in Central Europe in December and suggest that the slump in GDP in Q4 was smaller than we feared. But large virus outbreaks through the winter and …
7th January 2021
The Polish central bank’s (NBP’s) concerns about the strength of the zloty are likely to prompt it to intervene more aggressively in the FX market and deliver a 10bp interest rate cut, to 0.00%, most likely in March. But there is a growing risk that the …
6th January 2021
Supply chain disruptions intensify as lockdown measures bite The manufacturing PMIs for December provided encouraging signs that output and new orders continued to rise strongly. However, the surveys also provide evidence that supply chain disruptions and …
4th January 2021
Inflation rises further, but further rate hikes seem unlikely The further rise in Turkey’s headline inflation rate, to 14.6% y/y in December, is unlikely to be enough to push the central bank (CBRT) towards additional monetary tightening. Even so, with …
Industry boosts activity in November Russian activity data for November suggest that, despite the sharp rise in new COVID-19 cases and tightening of virus restrictions, the economy may come through Q4 suffering only a minor slowdown. Data published this …
18th December 2020
Russian government takes aim at food price surge Moves by the Russian government this week to try to curb the rise in food inflation are unlikely to have a major impact on monetary policy, but they underline that the shift towards providing more social …
The central bank of Russia (CBR) left its key policy rate unchanged at 4.25% as expected today but the accompanying communications delivered a clear hawkish shift. With headline inflation likely to remain high into 2021, interest rates are set to stay on …
Daily new COVID-19 infections have levelled off or fallen in most parts of Central Europe and there are signs that activity has started to rebound. But the fresh rise in new cases this month in Slovakia and the Czech Republic underlines the challenges …
17th December 2020
2020 has been a year full of surprises and in this Update we outline key areas to watch next year. Early vaccine distribution will pave the way for a rapid economic recovery, but disinflation forces are likely to become stronger in Central Europe and …
15th December 2020
Recovery still strong at start of Q4, but headwinds mounting Turkey’s industrial production and retail sales data for October suggest that the economy carried a lot of momentum into the start of Q4 but the recent tightening of virus containment measures, …
14th December 2020
Sanctions threat a reminder of Turkey’s fragility Both the US and the EU look set to impose sanctions on Turkey, which could undermine the gains from the recent shift to orthodox economic policymaking. Any sanctions are likely to be towards the milder end …
11th December 2020
Parliamentary elections in Romania that took place on Sunday look set to result in the incumbent centre-right PNL party forming a new coalition government. A new PNL-led coalition would probably pursue a more conservative fiscal stance over the coming …
10th December 2020
The success of the Russian government’s preferential mortgage scheme this year has prompted concerns that a bubble might be forming in Russia’s housing market, but we think this risk is some way off. In fact, low interest rates and an expansion of the …
Failure of Poland and Hungary to reach an agreement with the EU over the veto of the bloc’s budget would have severe political and economic consequences if funds were withheld. Even if a deal is agreed, perhaps as soon as the EU Council meeting on 10-11 …
9th December 2020
Jump in inflation takes easing off the table … for now The jump in Russian inflation to a 16-month high of 4.4% y/y last month takes the prospect of further interest rate cuts off the table for the next few months at least. That said, with underlying …
4th December 2020
Will Poland and Hungary blink? Comments by the leaders of both Hungary and Poland today suggest that their governments are unwilling to back down over their EU budget vetoes. But threats by EU officials to circumvent Poland and Hungary could make them …
Inflation jumps, raising risk that CBRT is forced to hike rates again Turkey’s headline inflation rate jumped to a stronger-than-expected 14.0% y/y in November and, while the lira has rallied strongly over the past month and the economy looks set to …
3rd December 2020
The distribution of effective COVID-19 vaccines is likely to be relatively quick in Emerging Europe, paving the way for robust economic recoveries that will leave economies much closer to their pre-virus trend by end-2022 than most other EMs. Poland is …
1st December 2020
Easing of COVID-19 restrictions in CEE to support industry The manufacturing PMIs for November point to a slowdown in the region but, overall, the sector has held up much better than services. Encouraging signs that Central & Eastern Europe has brought …
Rapid rebound, but next stage of recovery to be tougher Turkey’s economy recorded a strong 15.6% q/q rebound in Q3 from its collapse in Q2, but lingering weakness in the tourism sector as well as the recent tightening of both virus containment measures …
30th November 2020
CEE past the worst as virus outbreaks ease There are encouraging signs that virus outbreaks have passed the worst in Central & Eastern Europe. Poland, the Czech Republic, and Slovakia have all recorded a decline in new daily infections in recent weeks. …
27th November 2020
Virus restrictions deal a blow to sentiment The EC’s Economic Sentiment Indicators (ESIs) took a leg down in November and point to the recovery stalling in the middle of Q4. The fall in sentiment was broad-based across the region, though it was much …
The positive news on COVID-19 vaccines has provided a boost to the region’s economic outlook and this has underpinned a rally in local financial markets . The general improvement in risk appetite and the “rotation” back towards energy and financials has …
26th November 2020
Industry holding up as the recovery in retail goes into reverse October’s batch of Polish activity data showed a marked divergence in the performance of industry and retail that will probably grow in November as lockdown measures bite harder. The recent …
23rd November 2020
Recovery goes into reverse in October Russian activity data for October suggest that the recovery in activity stalled at the start of Q4. With virus restrictions tightening in many regions, the roll out of the vaccine pushed back, and fiscal support …
20th November 2020
Poland, Hungary & the EU: what’s at stake The decisions by Poland and Hungary this week to veto the EU budget and recovery fund brought to a head a conflict about the rule of law that has been brewing for some time. The EU’s concerns regarding Hungary and …
The decision by Turkey’s central bank to hike its one-week repo rate by 475bp, to 15.00%, and pledge to provide all funding through this facility appears to have done enough to convince investors that there really is a positive shift in policymaking …
19th November 2020
Hungary’s central bank left its key interest rates unchanged today but the recent appreciation of the forint and signs that disinflationary forces have picked up has given the central bank scope to reduce the interest rate on its one-week deposit back to …
17th November 2020
Vaccine presents a shot in the arm to the recovery With most of Emerging Europe struggling to contain virus outbreaks and with the number of deaths still on the rise, news of a potential vaccine breakthrough this week is hugely encouraging. While …
13th November 2020
An impressive rebound, but the strength will not last for long The Q3 GDP data for Central and Eastern Europe generally beat expectations and Poland’s economy recovered much faster than elsewhere in the region. But the recent tightening of virus …
Recovery strong in Q3, but next phase will be tougher Turkey’s industrial production and retail sales data for September add to the evidence the recovery was strong over Q3, although prolonged weakness in the tourism sector and the recent sharp tightening …
Sharp fall in output followed by a strong rebound The stronger-than-expected improvement in Russian GDP growth to -3.6% y/y in Q3 means that the economy has come through this crisis in better shape than many other EMs. But the recovery lost a lot of steam …
12th November 2020
The recent tightening of virus containment measures across the region will push back the economic recovery well into 2021 and means that policy support will need to be stepped up before, as seems likely, an effective vaccine is distributed next year. But …
President Erdogan’s latest comments suggest that the recent changes in Turkey’s economic management team may herald a shift back to orthodox policymaking. If these developments are backed up by a sharp interest rate hike at next week’s MPC meeting – we …
The sacking of Turkey’s central bank governor, as well as the (possible) departure of Finance Minister and President Erdogan’s son-in-law Berat Albayrak, has prompted a rally in local financial markets on expectations that breaks within the ruling AK …
9th November 2020
Sanctions risk not gone away for Russia and Turkey Joe Biden’s chances of securing the US presidency are rising and it looks like there will be a divided government in the Senate. The ruble has appreciated since the election, but the risk of tighter …
6th November 2020
