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The declines in the Economic Sentiment Indicators this month in Central and Eastern Europe support our view that growth in these economies is likely to weaken in the coming quarters. But the strength of consumer spending means that this slowdown will be …
30th August 2016
We expect food inflation in large parts of the EM world to ease in the coming months, which will provide some relief to policymakers in a number of high inflation economies, including Russia, Colombia and Brazil. However, talk of a widespread collapse in …
26th August 2016
The raft of second quarter GDP figures for Emerging Europe released this month painted a relatively bright picture, as regional growth hit a two-year high of 1.5% y/y. However, some of the more timely figures suggest that this improvement may not have …
Growth across Emerging Europe is likely to pick up in 2017-18, but it will be softer than most anticipate. While the region’s largest economy, Russia, will return to positive growth in the coming quarters, the recovery will be sluggish. In Central Europe, …
24th August 2016
The statement accompanying the Hungarian MPC’s meeting earlier today, at which the policy rate was left on hold at 0.90%, gave no sign that monetary easing is on the Council’s agenda. But we think growth and inflation are likely to be lower than the MPC …
23rd August 2016
The decision by the Turkish MPC to cut its overnight lending rate by a further 25bp, to 8.5%, provides further evidence that the Council is paying scant regard to its inflation target and more attention to moves in the currency (which has strengthened). …
The weak Polish activity data for July, which point to GDP growth slowing sharply to 2.5% y/y at the start of Q3, were distorted by working-day effects. Even so, the underlying trend seems to be one of a gradual economic slowdown. … Poland Industrial …
18th August 2016
Russian activity data for July suggest that the economy weakened a touch at the start of Q3, but we still think it’s likely that the recovery will resume over the rest of the year. Indeed, there was an encouraging sign that the slump in the construction …
17th August 2016
The slightly stronger-than-expected Czech Q2 GDP growth figure, of 2.5% y/y, reinforces our view that, while the economy is likely to slow a little further in the coming quarters, the strength of consumer spending means this will only be gradual. … Czech …
16th August 2016
The surprisingly strong batch of Q2 GDP figures for Central and South Eastern Europe released today suggest that growth in the region as a whole picked up to a robust 3.7% y/y from 3.0% y/y in Q1. We still expect growth to slow in the next few quarters as …
12th August 2016
The -0.6% y/y fall in Russia GDP in Q2 is, by our estimates, consistent with a modest rise in output over the quarter. We expect a gradual recovery to continue over the coming quarters. … Russia GDP (Q2 …
11th August 2016
Preliminary Q2 GDP figures for Emerging Europe due later this week are likely to show an encouraging uptick in growth in Central Europe. Meanwhile, output in the region’s largest economy, Russia, probably fell at a slower pace in the second quarter than …
9th August 2016
The weaker-than-expected Turkish industrial production growth figure for June, of just 1.1% y/y, adds to the evidence that the economy had slowed sharply even before July’s coup attempt. … Turkey Industrial Production …
8th August 2016
Russia’s unemployment rate has hardly budged despite the deep economic downturn over the past 18 months. There does, however, appear to be “hidden” slack in the labour market, one implication of which is that the recovery in the economy is unlikely to be …
5th August 2016
The larger-than-expected fall in Russian inflation to 7.2% y/y in July suggests that – barring an upside surprise in this month’s CPI figure – the central bank will resume its easing cycle at the next MPC meeting in mid-September. … Russia CPI …
4th August 2016
The Romanian MPC’s press conference was a little more dovish than we had anticipated, but robust domestic demand and rising inflation mean gradual interest rate hikes still seem more likely than not over the next 12 months. Elsewhere, the Czech MPC’s …
The much sharper-than-expected rise in Turkish inflation in July, to 8.8% y/y, will make it difficult for the central bank to justify any further loosening of monetary conditions. The easing cycle had already seemed to be nearing an end, but we now no …
3rd August 2016
The attempted military coup in Turkey last month doesn’t appear to have triggered a sharp decline in capital inflows, but there are already signs that the hit to confidence will cause domestic demand (and overall GDP growth) to suffer a temporary period …
2nd August 2016
July’s manufacturing PMIs point to a further slowdown in industrial production growth in Central Europe, to around 2% y/y, which could be an early sign of spillovers from the UK’s Brexit vote. However, we would caution against reading too much into these …
1st August 2016
Slightly stronger-than-expected inflation figures, coupled with the renewed fall in the ruble, prompted the Russian central bank to pause its easing cycle today, but we think inflation should resume its downwards trend in the current quarter, clearing the …
29th July 2016
Inflation in a number of EM commodity producers has remained stubbornly high over the past few months. Accordingly, consensus expectations for monetary policy in these countries have moved towards our more hawkish forecasts. … Inflation in EM commodity …
28th July 2016
The widespread rises in Economic Sentiment Indicators across Emerging Europe this month provide an early sign that the region’s economies have so far been unscathed by the UK’s vote to leave the EU. … Economic Sentiment Indicators …
Turkish financial markets have started to recoup some of their losses following the failed military coup earlier this month, but we think that the lira in particular is more likely to fall than to rise from here on. Currencies and equities elsewhere in …
27th July 2016
The Hungarian MPC seemed to pour cold water on the prospect of additional monetary policy easing in the statement accompanying today’s rate-setting meeting. However, we think the Council is still too optimistic about the economy’s growth prospects as well …
26th July 2016
The failed military coup in Turkey and subsequent government backlash have dominated investors’ concerns over the past week and triggered a sell-off in local financial markets. Policymakers have already taken steps to try to diminish financial stress and …
22nd July 2016
Turkey’s financial markets have fallen sharply following Friday night’s attempted coup and the subsequent backlash by the government, but the reaction appears relatively mild given the enormity of recent events. … Putting the Turkish market sell-off into …
21st July 2016
The Turkish MPC’s decision to cut its overnight lending rate by a further 25bp today suggests the Council views the market volatility stemming from Friday night’s attempted coup (and growing concerns about political risk) as short-lived. And given today’s …
19th July 2016
Russia’s activity data for June suggest that output probably contracted at the same pace in Q2 as it did in Q1. Industry has remained the key driver of the economy, but this has been offset by weak consumer spending and a large drag from construction. … …
June’s strong activity data from Poland were flattered by working day effects, but the underlying trend seems pretty strong. Indeed, the figures suggest that GDP growth may have picked up to around 3.5% y/y over Q2 as a whole. … Poland Industrial …
The near-term economic impact of Friday night’s attempted coup in Turkey will depend on the length and severity of market dislocation, but at the very least the economy is likely to suffer a period of slower growth, and the lira will remain under …
18th July 2016
The market sell-off triggered by the UK’s vote to leave the EU has reversed, but there is still uncertainty about what a post-Brexit Europe will look like and in the meantime signs of strain are appearing in other parts of the continent’s financial …
15th July 2016
Despite May’s sharper-than-expected rise in Turkish industrial production, growth over Q2 as a whole appears to have been weaker than in Q1. Meanwhile, May’s balance of payments data showed another encouraging fall in the current account deficit, but that …
14th July 2016
Planned changes by the National Bank of Hungary to its benchmark three-month deposit facility announced this afternoon could act to loosen monetary conditions, although in practice they seem unlikely to have a particularly large impact. … Hungary revamps …
12th July 2016
The Russian economy is through the acute phase of its crisis and a recovery should begin over the coming quarters. However, it will be extremely weak. We expect the economy to stagnate over 2016 as a whole and grow by just 1.5% in 2017. Inflation and …
11th July 2016
The Polish MPC used this afternoon’s post-meeting press conference to suggest that it was broadly unconcerned about the impact of the UK’s vote to leave the EU on the domestic economy, but we think Brexit may cause growth to be a little weaker than the …
6th July 2016
The negative economic spillovers on Central and South Eastern Europe from the UK’s vote for Brexit are likely to be smaller than many fear, but they will still drag on activity in the region. Accordingly, we have made some modest downwards revisions to …
The much sharper-than-expected rise in Turkish inflation last month, to 7.6% y/y, confirms our view that the recent falls in the headline rate were unsustainable. The central bank might still use last month’s modest fall in core inflation as justification …
4th July 2016
Early signs suggest that Russia’s economic recovery may have stalled in the second quarter due largely to renewed weakness in the construction sector. This seems to be the result of financial problems at construction companies combined with the effect of …
1st July 2016
This report is only available as a PDF. Click to download. … Emerging European markets underperform after Brexit vote …
30th June 2016
The sell-off in the majority of EM currencies in the wake of the Brexit vote is unlikely to have a significant impact on inflation in most of the emerging world. That said, it is likely to cause concern for policymakers in a handful of countries, most …
29th June 2016
This month’s Economic Sentiment Indicators in Emerging Europe suggest that growth in the region as a whole eased a touch at the end of the current quarter. These data don’t capture the impact from the UK’s vote for Brexit, although as we’ve argued before, …
There are already signs that the UK’s vote to leave the EU is emboldening populist and anti-EU sentiment in Central and Eastern Europe (CEE). Given that the region is a major beneficiary from the EU’s budget, the economic incentives suggest a departure …
28th June 2016
The UK’s vote to leave the EU in yesterday’s referendum is likely to cause further turbulence in Central and Eastern European (CEE) financial markets in the coming days and weeks. As things stand, we think that the vote will have a smaller near-term …
24th June 2016
The focus of investors in Central and Eastern Europe (CEE) is now squarely on the UK’s Brexit vote tomorrow. CEE has the largest linkages with the UK of any EM region, and so is more exposed to potential spillovers in the event that the UK votes to leave …
22nd June 2016
Hungary’s MPC made it clear today that further interest rate cuts are unlikely. And while the Council hinted at more “unconventional” policy loosening, we doubt that this would have a significant impact on overall monetary conditions. Elsewhere, following …
21st June 2016
Today’s weaker-than-expected Russian activity data for May provide early signs that the fall in GDP in Q2 may be larger than in Q1. Consumer-facing sectors continued to bear the brunt of Russia’s economic problems, although industry improved further. … …
20th June 2016
The decision this month by Russia’s central bank to lower interest rates after a hiatus of close to a year has been followed by fairly hawkish comments from policymakers making clear that this does not necessarily mark the start of a new easing cycle. …
Today’s batch of Polish activity data for May was disappointing and as things stand growth in Q2 is shaping up to be a little slower than Q1’s 3.0% y/y. But the slowdown has been modest and today’s figures are unlikely to have much bearing on monetary …
17th June 2016
Concerns about the emergence of economic populism in Central and Eastern Europe are on the rise once again. This is already weighing on local financial markets and, although it’s not likely to have an imminent impact on economic activity in the region, it …
