Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Our latest Banking Heat Map paints a broadly positive picture. Banks in Romania and Hungary – which have been among the weakest in Emerging Europe over the past decade – are returning to health, and there is growing evidence that non-performing loans have …
2nd June 2017
Last month’s PMIs for Emerging Europe suggest that conditions in the manufacturing sectors of the region’s two largest economies – Turkey and Russia – are improving. Moreover, manufacturing in Central Europe appears to have remained strong in Q2. … …
1st June 2017
Aggregate EM inflation remained close to an eight-year low in April, largely reflecting a slump in food inflation in major economies such as China and Brazil. While this weakness will soon reverse in both countries and push up EM food inflation, there are …
30th May 2017
Despite a gradual shift in the consensus over the past couple of months, we still think that markets are underestimating the extent to which inflation and interest rates in Russia are likely to fall over the next year or so. This is one reason why we …
May’s Economic Sentiment Indicators remained strong across Central and Eastern Europe, suggesting that regional growth stayed above 4% y/y in Q2. These figures support our above-consensus growth forecasts for the region this year. If anything, the risks …
Currencies in Central Europe have been the best performing in the emerging world over the past month and we think that they should generally fare well in the coming years. … Central Europe’s currencies …
26th May 2017
A recovery in construction appears to have been the key driver of the marked acceleration in GDP growth across Central Europe in Q1. This rebound is likely to be sustained over the course of 2017, which is one reason why we think growth in the region will …
The combination of strong growth and rising inflation in Central and Eastern Europe (CEE) has shifted attention to when and how policymakers might respond. To help answer this, we’ve created Taylor Rules for the region’s economies. These suggest that …
25th May 2017
First quarter GDP estimates for Emerging Europe published this month beat expectations across the board and suggest that growth in the region as a whole picked up to a three-year high of 2.3% y/y. Romania was the region’s star performer, growing by close …
23rd May 2017
The better-than-expected batch of Russian activity data for April indicate that the economy probably grew by 0.7-0.8% y/y at the start of Q2, up from 0.5% y/y in Q1. … Russia Activity Data …
22nd May 2017
We wouldn’t read too much into the batch of weak April activity data for Poland, which were depressed by calendar effects. The underlying trend still seems to be one of strong growth. … Poland Industrial Production & Retail Sales …
19th May 2017
The statement that followed today’s MPC meeting in Poland was broadly unchanged from previous months and suggests that any change in interest rates is unlikely in the coming months. But with core price pressures set to build over the second half of the …
17th May 2017
First quarter GDP data from Russia were a touch stronger than expected and are all the more encouraging given that calendar effects will have pulled down the growth figure for Q1. Our GDP forecasts for both 2017 and 2018 remain above the consensus. … …
Financial markets in the Czech Republic have, for the most part, shrugged off the various twists and turns in the political crisis that has gripped the country over the past couple of weeks. Accordingly, there is no reason to think that it will have any …
16th May 2017
The stronger-than-expected batch of Q1 GDP data from Central and South Eastern Europe means that risks to our above-consensus 2017 growth forecasts now lie to the upside. These figures also raise the likelihood that monetary policy normalisation in the …
In a recent Quick Take audio recording (available here) , we discussed why the Central Bank of Russia had caught the markets (but not us) off guard at its last two meetings and why interest rates are likely to fall further than most expect in the coming …
12th May 2017
One important consequence of the recent period of strong growth in Central and Eastern Europe is that economies are now running at close to full employment. We expect growth to remain robust over the next 12 months but, as output gaps close, underlying …
10th May 2017
Turkish industrial production growth in March was a little stronger than expected, but the 2.8% y/y expansion still paints a picture of a slow recovery from last year’s slump. … Turkey Industrial Production …
8th May 2017
The further fall in Russian inflation last month – and in core inflation in particular – reinforces our view that the central bank’s easing cycle has much further to run. We expect another interest rate cut at the next Board meeting in June and that rates …
5th May 2017
The Czech MPC’s statement accompanying today’s rate-setting meeting was generally quite dovish, but it does looks like the Council intends to start raising interest rates, albeit very slowly, this year. Accordingly, we are now pencilling in one hike in …
4th May 2017
The further rise in Turkish inflation in April, to 11.9% y/y, probably marks the peak for the headline rate, and it should slowly reverse course in the coming months. As things stand, our sense is that the central bank won’t follow up last month’s …
3rd May 2017
Last month’s PMIs for Emerging Europe suggest that manufacturing in Central Europe remained strong at the start of Q2, but highlight that the recoveries in Russia and Turkey are still fragile. … Manufacturing PMIs …
2nd May 2017
The Russian central bank’s 50bp interest rate cut to 9.25% today was larger than most (but not us) expected and, taken together with the relatively dovish tone of the statement, supports our view that the policy rate will come down much further than the …
28th April 2017
The continued strength of the Russian ruble this month has started to raise concerns among policymakers, with President Putin hinting that some form of action might be taken to stem the rise. At the margin, this makes the non-consensus 50bp interest rate …
27th April 2017
The rise in the Economic Sentiment Indicators for Central and Eastern Europe this month suggests that regional growth was probably close to 4% y/y at the start of Q2. These figures support our above-consensus growth forecasts for the region this year. … …
The Turkish MPC’s surprise move to tighten monetary policy further today via another hike in the late liquidity rate indicates that policymakers may have a greater resolve to tackle the country’s inflation problem than we (and most others) had …
26th April 2017
EM inflation remained at close to an eight-year low last month, driven in large part by weakening price pressures in the BRIC economies. Inflation has been on the rise in most other EMs, although not by enough to trouble policymakers. … EM inflation …
25th April 2017
The latest activity data from Russia and Turkey suggest that both economies lost momentum in Q1. Our GDP Trackers indicate that output in Russia stagnated in annual terms (following an expansion of 0.3% y/y in Q4) and that growth in Turkey weakened to …
24th April 2017
The latest surveys and monthly activity figures suggest that the economies of Central and Eastern Europe (CEE) made a strong start to the year. And Poland appears to have seen one of its fastest growth rates since the global financial crisis. This all …
21st April 2017
The extremely strong batch of Polish activity data for March suggests that the economy may have grown by as much as 4.5% y/y over Q1 as a whole, up from 2.7% y/y in Q4 of last year. This supports our above-consensus 2017 growth forecast. … Poland …
20th April 2017
Turkey’s constitutional referendum last Sunday has resulted in a small bounce in local financial markets, with some of the biggest moves coming in short-term local currency bonds. That could be a sign that markets are starting to anticipate monetary …
18th April 2017
The improvement in the Russian activity data for March confirmed that the slump shown in the February figures was a blip. That said, weakness earlier in the quarter means that year-on-year GDP growth probably slowed over Q1 as a whole. … Russia Activity …
Turkey’s current account deficit remained wide in February, but there are some encouraging signs that the boost to competitiveness from the weak lira may already be having a positive effect. Elsewhere, last month’s softer-than-expected inflation figure …
11th April 2017
The further rise in Czech inflation (both headline and core) last month is, with the koruna cap now at an end, likely to shift attention to the timing of the first interest rate hike. For our part, we think these are likely to occur in 2018. Elsewhere, …
10th April 2017
Russian equities and its currency have fallen following US airstrikes on Syria early this morning, reflecting fading hopes that US-Russia relations will normalise and that sanctions might be lifted. That said, the chances of an end to sanctions already …
7th April 2017
Despite what looks like heavy FX intervention by the Czech National Bank upon the exit from the koruna ceiling policy earlier today, comments from Governor Rusnok suggest that the Bank will tolerate sizeable appreciation of the currency. We are sticking …
6th April 2017
The relatively dovish stance taken by the Polish MPC at today’s post-meeting press conference reinforces our view that monetary tightening is a long way off. We only expect interest rate hikes to come in 2018. While the Romanian MPC also struck a fairly …
5th April 2017
The further decline in Russian inflation last month, and in core inflation in particular, means another interest rate cut looks likely at the next central bank Board meeting later this month. As things stand, we expect another 25bp cut in the benchmark …
The sharp rise in Turkish inflation in recent months has been caused by a combination of the fall in the lira, higher petrol inflation and a harsh winter. The impact of these should fade in the coming months, meaning the headline rate is close to peaking. …
Recent revisions to Russia’s economic data have drawn scorn and generated confusion but, while the country’s statistics are far from perfect, the changes do appear to be a step in the right direction. … Russia’s data revisions: slip-up or …
3rd April 2017
The sharp rise in Turkish inflation last month supports our view that, while the central bank’s tightening cycle has probably run its course, interest rates will stay very high. In better news, March’s manufacturing PMI pointed to a further improvement in …
The Russian economy’s return to positive year-on-year growth in Q4, of 0.3% y/y, was driven by stronger inventory investment and a shallower fall in consumer spending. These trends are likely to continue in the coming quarters and we expect growth to be …
31st March 2017
Russia’s bond market hardly moved in reaction to the central bank’s surprise re-start of its easing cycle last week. However, we think the policy rate will ultimately be lowered much further than markets anticipate, bringing local currency government bond …
Turkish Q4 GDP growth came in at a much stronger-than-expected 3.5% y/y, and has prompted us to revise up our forecast for this year from 1.8% to 2.5%. However, in contrast to the consensus, we don’t expect growth to accelerate in 2018. … Turkey GDP …
We think the next Czech MPC meeting on 4th May is the most likely date for a lifting of the koruna cap, but today’s comments by the Council have raised the risk that it happens outside of a scheduled monetary policy meeting (perhaps as soon as next …
30th March 2017
March’s Economic Sentiment Indicators suggest that, in aggregate, growth in Central and Eastern Europe slowed a touch this month. However, regional growth over Q1 as a whole still appears to have been stronger than in Q4, driven by an improvement in …
The press release accompanying the Hungarian MPC’s meeting earlier today remained dovish, but we think the Council is probably underestimating how quickly inflation will rise in the second half of this year. That could prompt the MPC to unwind its …
28th March 2017
EM inflation fell sharply last month but this was driven almost entirely by a New Year-related drop in food inflation in China. This will reverse in March, meaning aggregate EM inflation is likely to rebound. However, the big picture remains that aside …
27th March 2017
Having cut the one-week repo rate by 25bp earlier in the day, Russia’s central bank governor, Elvira Nabiullina, used her post-meeting press conference to stress that further monetary easing will be gradual. While this suggests that interest rate cuts are …
24th March 2017
The jump in inflation across much of Emerging Europe last month has shifted the focus onto policy tightening. But in most cases this has been a one-off rise from higher fuel inflation, and there is little evidence that a policy response is imminent. While …
23rd March 2017
