Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
The strong batch of Polish activity data for July suggests that the economy continued to grow at around 5% y/y at the start of Q3. … Poland Activity Data …
22nd August 2018
Turkey’s economy has so far managed to come through the worst of the plunge in the lira without suffering acute financial stress. That said, the banking sector faces a large external debt repayment schedule over the next few months and in the spring of …
20th August 2018
Russian activity for July suggest that the economy continued to grow at a steady pace between Q2 and the start of Q3. Our Tracker is consistent with GDP growth of about 2.5% y/y and, while the Tracker overstated the pace of expansion in Q2, the national …
17th August 2018
The Turkish lira has recovered lost ground since Monday, although policymakers have only done the bare minimum in response to the crisis. There have been some positive noises on fiscal policy, yet there is no sign that the central bank will raise interest …
The plunge in the Turkish lira is likely to push inflation above 20% and tip the economy into recession in the coming months. Our base case is that GDP growth will now average 3.0% over 2018 as a whole (thanks to a strong first half of the year) and be …
15th August 2018
GDP data for Central and Eastern Europe showed that regional growth slowed for a third consecutive quarter in Q2. We expect that this slowdown will continue over the rest of 2018 and 2019. … Central & Eastern Europe GDP …
14th August 2018
Turkish policymakers have taken steps to support local banks today, but concerns have continued to mount about the health of the sector. Banks appear to hedge all their on-balance sheet FX mismatches so they’re not directly exposed to the lira’s collapse. …
13th August 2018
The collapse in the lira has raised concerns about the health of Turkey’s banking sector. Banks’ dollar bonds yields and interbank interest rates are already pointing towards some stress, and these will be key indicators to watch over the coming days and …
10th August 2018
The pick-up in Russian GDP growth, to 1.8% y/y in Q2, was a bit weaker than we had expected and there is now a downside risk to our growth forecast of 2.3% for the year as a whole. Even so, we think there’s a good chance that these data will be revised …
Turkey seems to have been on the brink of a crisis several times this decade, only for the central bank to do just enough to steady the ship. But there are reasons to think that emergency interest rate hikes during the current currency crisis might only …
GDP data out next week will probably show that GDP growth in Central and Eastern Europe slowed for a third straight quarter in Q2. We think that the slowdown will continue over the rest of 2018 and 2019. … CEE slowdown …
9th August 2018
The fact that the US sanctions (or the threat of) are having a bigger impact on financial markets in Turkey than Russia reflects the latter’s much stronger balance sheets as well as the credibility of its central bank. This should help to limit the …
The lesson from other countries that have suffered from currency crises is that fiscal and monetary policy will need to tighten, preferably under the auspices of an IMF deal, to stabilise the economy. However, it’s unclear that this is politically …
8th August 2018
The plunge in the lira and rise in borrowing costs is likely to push the Turkish economy into a technical recession in the second half of this year. But the vulnerabilities that have built up in the banking sector during the recent credit boom could turn …
The Turkish lira has recovered some of its losses in the past few hours, but the plunge in the currency over the past few weeks is now on a scale which has, in the past, prompted the central bank to hike interest rates aggressively. We were expecting …
7th August 2018
The small rise in Russian headline inflation, to 2.5% y/y, was driven by higher food inflation, while underlying price pressures still look very soft. We still think the central bank will lower interest rates over the next 12-18 months or so, whereas the …
6th August 2018
The US’s decision to impose sanctions on Turkey this week, as well as another bad inflation reading, has strengthened the case for further interest rate hikes. And there’s a growing risk of severe macroeconomic stress. Elsewhere, Hungary’s much-vaunted …
3rd August 2018
A bill presented in the US Senate yesterday has raised the threat of US sanctions on Russian sovereign debt. Were the bill to pass, we think it might plausibly add a premium of about 50-100bp to the yields of newly issued bonds. There could be a more …
The rise in Turkish inflation to a 15-year high of 15.8% y/y last month, coming alongside further lira weakness following the imposition of US sanctions, strengthens the case for interest rate hikes. While the central bank faces pressure from the …
The new forecasts accompanying today’s Czech MPC meeting – at which the policy interest rate was raised by 25bp – suggest that another hike is likely in November. In 2019, we think that interest rates will be raised by more than the central bank and …
2nd August 2018
The sanctions imposed by the US on two Turkish government ministers in themselves aren’t very big, but it looks likely that more measures will be announced. The lira is likely to fall further, strengthening the case for interest rate hikes. And given the …
July’s manufacturing PMIs suggest that the economies of Emerging Europe made a soft start to Q3. What’s more, the surveys provide evidence that price pressures are building across most of the region. … Manufacturing PMIs …
1st August 2018
The latest hard activity data from Turkey has been surprisingly robust, but more timely survey evidence and low-profile data suggest that a sharp slowdown is underway. Officials are reportedly preparing stimulus measures in a bid to prop up growth, but …
31st July 2018
The rise in inflation in most of Emerging Europe over the past month has caused central banks to adopt a more hawkish tone. Policymakers in Romania and the Czech Republic are likely to hike interest rates further in August, and Hungary’s central bank is …
30th July 2018
Our weighted-average of the Economic Sentiment Indicators for Central and Eastern Europe (CEE) dipped a little this month, but it still suggests that GDP growth across the region held up well at the start of Q3. … Economic Sentiment Indicators …
The Russian central bank’s post-meeting statement once again sounded hawkish on inflation risks. But it also implied that interest rates could be lowered in 2019, supporting our view that the easing cycle has further to run. In contrast, the markets …
27th July 2018
Signs this week that Russian President Vladimir Putin now opposes a planned rise in the retirement age suggest that the one significant policy reform announced in the country in the past three years may be scrapped, which could prevent a sizeable boost to …
We expect GDP growth across Emerging Europe to slow by more than most expect over 2019-20 and monetary policy is set to be tightened further than is priced into markets. The important exception to this regional story is Russia, whose recovery over the …
26th July 2018
Poland’s economy is set to expand at a robust pace over the remainder of 2018, but rising inflation and tighter monetary policy will cause the economy to slow by more than is widely anticipated in 2019 and 2020. What’s more, the country’s longer-term …
25th July 2018
President Erdogan’s growing influence over monetary policy leaves the public finances as the last remaining strong point of Turkey’s economy. But the budget position has deteriorated in recent years and, if anything, it looks like policy will be loosened …
The Hungarian MPC’s post-meeting communications reinforced the message that the MPC is inching towards a tightening cycle. For our part, we think inflation is likely to rise further than most think and, as a result, interest rates will ultimately be …
24th July 2018
The Turkish central bank’s decision to leave its one-week repo rate unchanged at 17.75%, when most had expected at least a 100bp hike, suggests that President Erdogan is already using his strengthened position to influence monetary policy. The lira has …
Activity data released in Russia, Turkey and Poland suggest that regional GDP growth remained strong at around 4% y/y in Q2. Among a number of monetary policy decisions due next week, we expect Turkey’s central bank to hike interest rates by another …
20th July 2018
June’s activity data for Russia were a bit soft, but remain consistent with a pick-up in GDP growth from 1.3% y/y in Q1 to around 2.5% y/y in Q2. … Russia Activity Data …
18th July 2018
The stronger-than-expected Turkish industrial production data for May, at first sight, suggest that the economy has weathered the recent financial market turmoil, but we doubt that this resilience will last. Indeed, there are signs that underlying …
17th July 2018
Turkish President Erdogan’s decisions this week to exclude investor-friendly members from his new cabinet and renew his calls for lower interest rates have rattled local financial markets and, ironically, strengthened the case for further rate hikes . …
13th July 2018
Poland’s MPC bucked the regional trend today by retaining its ultra-dovish stance. However, we think that Polish policymakers will soon start to follow their neighbours. Inflation is likely to rise above the central bank’s 2.5% target range by early-2019, …
11th July 2018
Moves over the past 24 hours by Turkey’s President Erdogan to consolidate his power is likely to result in pressure for looser monetary and fiscal policy, but this will ultimately come at the cost of weaker (and more volatile) economic growth, higher …
10th July 2018
The modest decline in Russian inflation in June, to 2.3% y/y, was mainly a result of a sharp fall in fruit and vegetable inflation. And while headline inflation is still weak, there were some tentative signs in the data that broader price pressures may be …
6th July 2018
The infringement procedure launched this week by the European Commission against Poland – in response to controversial legal reforms and the associated worries about the erosion of judicial independence – has put the country in the headlines this week. We …
Although the National Bank of Romania left its key policy rate unchanged today, the Bank is using open market operations to tighten monetary conditions. We think that policymakers will return to conventional interest rate hikes to tighten policy in the …
4th July 2018
Yesterday’s stronger-than-expected consumer price figures from Turkey provides further evidence that falls in the lira are feeding through into higher inflation more quickly and to a greater extent than had previously been the case. More than anything, …
The much stronger-than-expected rise in Turkish inflation in June, to 15.4% y/y, is likely to prompt the central bank to hike interest rates, perhaps by 100bp, at its meeting later this month. … Turkey CPI …
3rd July 2018
Last month’s manufacturing PMIs made for disappointing reading in most of Emerging Europe. After plunging to a nine-year low in May, the Turkish survey remained weak in June, suggesting that the recent sharp tightening of financial conditions is hitting …
2nd July 2018
Victories for President Erdogan and the AKP in Turkish elections last weekend have supported a rally in local markets over the course of this week but this has overshadowed the latest survey data which reinforce our view that the economy will experience …
29th June 2018
The upwards revisions to Russia’s industrial production figures have raised concerns about the quality of the data but, based on the figures released so far, the new series does seem to reflect economic conditions more accurately than the older series. … …
Central banks across Emerging Europe have become increasingly hawkish in the past few weeks, supporting our view that policy in the region will (in most places) be tighter than most expect over the coming years. A sell-off in the lira since early May has …
28th June 2018
At a regional level, Economic Sentiment Indicators for Central and Eastern Europe were weaker in Q2 than in Q1, supporting our view that regional GDP growth peaked in Q3 2017. … Economic Sentiment Indicators …
The statement and press conference following today’s Czech MPC meeting – at which the Council resumed its tightening cycle – were on the hawkish side, supporting our view that further rate hikes are in store. We expect that the policy rate will be raised …
27th June 2018
The ECB’s ‘tapering’ of its asset purchases later this year and probable rate hikes in 2019 are unlikely to have much economic or financial market impact in Central and Eastern Europe (CEE). But, at the margin, it does add to the reasons to think that …
26th June 2018
