Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Concerns about Turkey’s economy and financial markets are unlikely to fade even once Sunday’s local elections are out of the way. If anything, we think that they will intensify. Meanwhile, expected revisions to Russian GDP figures due next week are likely …
29th March 2019
Ukraine’s presidential election this Sunday is set to be a close race but, whoever ultimately wins, it looks like the recent shift away from orthodox policymaking will continue. Dollar bond spreads are likely to widen and the currency will weaken over the …
The Czech National Bank made clear that it is more concerned about the impact of weakness in the euro-zone than strong domestic inflationary pressures. We still think that above-target inflation may trigger more tightening this year, but we have revised …
28th March 2019
The turmoil in Turkey’s financial markets has raised external borrowing costs, making it more difficult to roll over the country’s large external debt burden. The risks are largest in the banking sector. … Turkey’s banks the weakest link during market …
March’s set of ESIs point to GDP growth in Central and Eastern Europe holding up at 4.0% y/y in Q1. But evidence that the weakening external environment is starting to take a bigger toll the region’s industrial sectors supports our view that GDP growth …
The Turkish lira has recovered lost ground, but financial conditions remain much tighter than they were at the start of last week and point to continued weakness in domestic demand. … Turkey: financial conditions tighten …
27th March 2019
Today’s very small interest rate hike in Hungary was the least that policymakers could do to show their commitment to the inflation target. But so long as key euro-zone export markets don’t weaken much further from here, today’s move is unlikely to be the …
26th March 2019
The sell-off in the Turkish lira late last week provided a timely reminder that many of the factors that drove last year’s currency crisis – including geopolitical tensions and concerns about the direction of domestic policymaking – have not disappeared. …
25th March 2019
The first batch of hard activity data for February out of Emerging Europe – published this week in Russia and Poland – were surprisingly strong, but it seems unlikely that this will be sustained as weakness in the euro-zone starts to take its toll. …
22nd March 2019
The Central Bank of Russia’s dovish tilt today has prompted us to bring forward some of the interest rate cuts that we had been anticipating in 2020. We now think that the policy rate will be lowered from its current rate of 7.75% to 7.25% by the end of …
Emerging Europe was one of the few parts of the world where inflation rose last month. In the Czech Republic, Hungary and Romania, this was driven by rapid wage growth which has pushed core inflation up to multi-year highs. As a result, despite the …
February’s activity data suggest that the Polish economy has, so far at least, shrugged off the recent weakness in Germany and continued to grow at a rapid pace in Q1. … Poland Activity Data …
21st March 2019
Given the weak start to the year, it looks like Russian GDP growth is shaping up to be weaker in Q1 than in Q4. But February’s activity data were more encouraging, and it does at least appear that growth has strengthened over the course of the first …
20th March 2019
We think that weakness in Germany and softening domestic demand will result in Czech GDP growth slowing to about 2.5% this year. This puts us at the bottom of the range of forecasters. … Slowdown in Czech economy likely to …
19th March 2019
Pro-IMF comments this week from the front-runner in Ukraine’s presidential election race (and comedian), Volodymyr Zelenskiy, reduce the risk that this month’s vote could trigger an adverse reaction in the currency and bond markets. Meanwhile, Russian …
15th March 2019
The stronger-than-expected Turkish industrial production data for January suggest that the worst of the recession has passed. That said, the recovery is likely to slow-going and our forecast for GDP to contract by 2.5% over this year as a whole lies below …
14th March 2019
The growing prevalence of foreign currency deposits in Turkey’s banking sector is symptomatic of the country’s long-standing inflation problem. Unless the central bank breaks with the past and brings down inflation on a sustained basis, deposit …
13th March 2019
The Turkish economy formally entered into recession in the final quarter of last year and, while the worst of the downturn may now have passed, the weak carryover means that we expect GDP to decline by 2.5% this year. Our forecast lies well below the …
11th March 2019
The Turkish lira has been one of the worst-performing EM currencies this week which, in part at least, seems to reflect investors no longer buying the central bank’s hawkish rhetoric. Elsewhere, comments from the Russian central bank support our view that …
8th March 2019
The reasonably small rise in Russian inflation, from 5.0% y/y in January to 5.2% y/y in February, is likely to offer further reassurance to the central bank that a recent VAT hike hasn’t fed into a sharp rise in consumer prices. We think that the next …
6th March 2019
The hawkish tone of the Turkish central bank’s recent communications meant that a rate cut was never likely at today’s meeting. But with inflation set to fall further in the coming months and the economy in dire straits, we suspect that an easing cycle …
The weaker-than-expected Turkey inflation data for February are unlikely to be enough to persuade the central bank to lower interest rates at its monetary policy meeting later this week. We expect the one-week repo rate to be left on hold at 24.00%. … …
4th March 2019
The breakdown of the Central European Q4 GDP figures released this week showed that the surprisingly strong growth rates were driven by a rebound in exports, which appears to be related to a one-off bounce in the auto sector. The manufacturing PMIs for …
1st March 2019
The Czech koruna is likely to defy the central bank’s (CNB’s) expectation that it will appreciate over the coming quarters. One consequence of this is that policymakers will probably raise interest rates further to curb above-target inflation, even if the …
28th February 2019
February’s strong batch of ESIs suggest that resilient domestic demand is helping the economies of Central and Eastern Europe to cope with economic weakness in Germany. … Economic Sentiment Indicators …
27th February 2019
Developments this month suggest that governments in parts of the region are embarking on fiscal stimulus to boost growth and prop up popular support. Recent policy announcements in Russia and Turkey look small, although the Polish government looks set to …
Data published over the past week provided further evidence that the region’s economies slowed at the start of this year. This, coming alongside lower inflation, has resulted in a dovish shift by central banks in parts of the region: Turkey’s central bank …
22nd February 2019
Hungary was one of the fastest-growing EMs in the final quarter of last year. But almost all this was due to temporary factors and we expect that GDP growth will slow sharply this year. … Hungarian outperformance driven by one-off …
21st February 2019
January’s Polish industrial production data will help to allay fears about an abrupt slowdown. But it still appears that Poland’s economy as a whole lost steam at the start of this year and, as external demand weakens, the resilience of industry is …
The recent recovery in Russian private sector credit growth is likely to continue over the coming quarters, supporting our view that, despite the weakness of recent activity data, economic growth will be a little stronger than most expect in 2019. … …
20th February 2019
The improvement in Turkey’s current account position means the lira no longer looks fundamentally misaligned, but the recent period of stability won’t last. While a repeat of last year’s currency crisis is unlikely, the lira will depreciate and it remains …
19th February 2019
Data released this week showing a pick-up in core inflation in Hungary and the Czech Republic support our view that, unless the activity figures take a sharp turn for the worse, central banks in both countries are likely to tighten monetary policy. …
15th February 2019
The strength of the latest GDP figures out of Central Europe, despite weakness in Germany, partly reflects rapid wage growth and robust consumer spending. But it also looks like growth was supported by a rebound in car production, which added an average …
Developments in the US Senate indicate that sanctions on Russia are likely to tighten in the coming months. Historically, the introduction (or threat) of sanctions has tended to result in a long-lasting premium on Russian dollar bonds and the currency. …
14th February 2019
GDP data for Central and Eastern Europe showed that growth in the region held up pretty well at the end of last year – especially considering the ongoing weakness in Germany. Even so, growth still weakened everywhere, and today’s data probably mark the …
The bigger-than-expected fall in Turkish industrial production in December adds to the evidence that the economy performed terribly in the final quarter of last year. We think that GDP may have contracted by as much as 4.0% y/y in Q4. … Turkey Industrial …
We suspect that the sharp slowdown in Russia’s manufacturing sector in the second half of 2018 was due to a fall in public spending on military and railway transport. If we’re right, manufacturing should recover in 2019 as defence and infrastructure …
12th February 2019
The much stronger-than-expected Russian GDP growth figure for 2018, released this week, led to accusations that Rosstat is manipulating the figures, but we think that these data actually paint a pretty accurate picture of Russia’s economy last year. …
8th February 2019
The less hawkish nature of the Russian central bank’s statement means that we no longer expect an interest rate hike in the coming months. Instead, with inflation likely to return to target in 2020, we think that interest rate cuts will come back onto the …
The Czech National Bank’s post-meeting communications made clear that concerns about the external environment resulted in interest rates being left on hold – rather than hiked – today. Given the Bank Board’s focus on wages and inflation, additional …
7th February 2019
The softer-than-expected Russian inflation figure for January, of 5.0% y/y, is likely to temper some of the central bank’s hawkish rhetoric when the Board meets on Friday. Given the central bank’s tendency to respond to rising inflation (and …
6th February 2019
The stronger-than-expected Russian 2018 GDP growth figure of 2.3% suggests that Rosstat has made significant upwards revisions to the quarterly growth figures for the first half of last year. Based on this, it appears that growth has already peaked and, …
4th February 2019
The slight rise in Turkish inflation in January was driven by higher food inflation but even so, coupled with the hawkish tone of the central bank’s latest Inflation Report, it probably means that interest rate cuts are at least a few more months away. … …
The budget surplus recorded in Russia in 2018 has put the spotlight on austerity measures, but it actually looks like fiscal policy will provide more support to the economy this year than it did in 2018. Meanwhile, the Turkish central bank’s latest …
1st February 2019
Another soft batch of PMI data from Central Europe suggests that the continued weakness of euro-zone industry is weighing heavily on the region’s export-led manufacturing sectors. On past form, the latest PMI readings point to a contraction in Central …
Data released over the past month suggest that regional GDP growth slowed from to 2.4% y/y in Q3 to a two-year low of 1.2% y/y in Q4. This was due mostly to the economic slump in Turkey, where activity has collapsed in the aftermath of last year’s lira …
31st January 2019
The preliminary estimate of Polish annual 2018 GDP, which showed an expansion of 5.1% over the year as a whole, suggests that the economy slowed in Q4. Inventories appear to have exerted a sizeable drag on growth in the final quarter and are likely to …
A weak batch of ESIs for January supports our view that the economies of Central and Eastern Europe will slow by more than more expect over the course of 2019. … Economic Sentiment Indicators …
30th January 2019
GDP growth across Emerging Europe is likely to slow in 2019, and by more than most anticipate. Turkey’s economy will continue to suffer from the effects of last year’s lira crisis, while the slowdown in Germany will weigh on the highly-open Central …
29th January 2019
The batch of Russian activity data for December suggests that the economy weakened at the end of last year. Even so, GDP growth over Q4 as a whole was probably a little stronger than it was in Q3 (about 1.8-2.0% y/y, up from 1.5% y/y). … Russia Activity …
25th January 2019
