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The Turkish central bank’s decision to keep interest rates unchanged despite the worsening inflation outlook underlines the extent to which political pressures seem to be bearing on the MPC. The Council may be able to get away with this in the current …
23rd February 2016
The latest data from Central and South Eastern Europe (C&SEE) serve as a timely reminder that, despite widespread pessimism, some parts of the emerging world are faring well. Flash Q4 GDP estimates suggest that aggregate growth in C&SEE came in at around …
22nd February 2016
The usual raft of activity data for January showed that, following an awful December, conditions in the Russian economy improved at the start of this year. Encouragingly, there are early signs that falling inflation is starting to ease pressure on …
18th February 2016
January’s batch of Polish activity data paints a worrying picture of the health of the economy at the start of this year, even taking into account distortions due to working-day effects. However, as things stand, there are reasons to think that slower …
17th February 2016
The sharp fall in the ruble over the past year or so has eased some of the pressure on Russia’s government finances but we suspect that structural problems will prevent the wider economy from fully capitalising on potential benefits presented by a weaker …
16th February 2016
The fall in Czech GDP between Q3 and Q4 will take some of the gloss off Emerging Europe’s best performing economy last year. The underlying picture is still strong, but at the margin these data increase the likelihood that the National Bank may ease …
The fall in Polish inflation in January, to a weaker-than-expected -0.7% y/y, appears to be due to a decline in core inflation. Accordingly, these figures raise the risk that the new-look MPC will adopt a more dovish stance at next month’s Council …
12th February 2016
The raft of stronger-than-expected flash Q4 GDP growth figures from Central and South Eastern Europe suggest that the region as a whole grew by close to 4% y/y, its best rate since 2008. These serve as a timely reminder that not all parts of the emerging …
Turkey’s current account deficit widened in December from November, but that was largely due to seasonal factors and the underlying trend is still one of an improving external position. The upshot is that the risk of a sharp sell-off in the lira over the …
11th February 2016
Lower oil prices and a more dovish US Fed have given the Turkish economy a stay of execution and, as a result, we have revised up our GDP growth forecast for this year to 3.0% in 2016 (from 1.5% previously). But the economy’s large vulnerabilities haven’t …
9th February 2016
The stronger-than-expected rise in Turkish industrial production in December, of 4.5% y/y, provides further evidence that GDP growth over Q4 as a whole was robust. We think the economy may have expanded by around 4% y/y. … Turkey Industrial Production …
8th February 2016
The sharp fall in Russian inflation in January can be explained by the fact that the effects of the collapse in the ruble at the end of 2014 and start of 2015 fell out of the annual comparison. However, the respite is likely to be brief. Base effects are …
5th February 2016
The Czech MPC was even more dovish than we had expected at this afternoon’s post-meeting press conference as it not only extended its commitment to keeping the exchange rate ceiling in place to 2017 (as we had suggested might happen), but it also …
4th February 2016
The recent run of weak data, coupled with the latest fall in oil prices, has prompted us to revise our forecasts for Russia. We now expect the economy to contract by 1.3% this year and grow by just 0.5% in 2017, both of which are below the consensus. …
3rd February 2016
Stronger-than-expected Turkish inflation in January, of 9.6% y/y, was partly driven by administered price hikes and what is likely to be a temporary unwinding of the impact of the decline in global oil prices. But even so, underlying price pressures are …
The recent talk of a new wave of privatisation in Russia has attracted much attention, but we suspect that there is less to the proposed plans than meets the eye. While these may temporarily improve the public finances, history suggests that the extent of …
2nd February 2016
January’s manufacturing PMIs for Emerging Europe provided further evidence that the Central European economies made a robust start to the year. Admittedly, the Polish PMI was weak, but there are reasons to think that this may understate the strength of …
1st February 2016
The divergence in EM inflation looks set to persist throughout 2016. In Emerging Asia, Central Europe and parts of the Middle East, low oil prices will help keep inflation muted. But in some of the economies already suffering with elevated inflation, most …
29th January 2016
The Russian central bank kept its benchmark one-week repo rate on hold at 11.00% earlier today, but the markedly more hawkish tone of the accompanying statement makes it clear that rate cuts – which the MPC had hinted at recently – are off the cards. …
January’s Economic Sentiment Indicators for Central and Eastern Europe were surprisingly strong and, on past form, point to growth of over 4% y/y at the start of 2016. These figures highlight that at least some parts of the emerging world weren’t mired in …
28th January 2016
The fresh leg down in oil prices has caused the ruble to tumble, making it one of the worst-performing EM currencies so far this year. Elsewhere, mounting concerns about populist policymaking in Poland have weighed on the zloty. Other currencies in the …
27th January 2016
The latest fall in oil prices and in the ruble since the start of the year has dealt a blow to hopes that Russia’s economy would stabilise in the near future. Fiscal policy is likely to be tightened to counter the hit to the public finances. And the …
26th January 2016
The preliminary estimate of Polish annual 2015 GDP, which showed an expansion of 3.6% over the year as a whole, suggests that growth picked up in Q4. This appears to be due to strengthening investment. … Poland GDP …
Preliminary Russian GDP data, which showed that the economy contracted by 3.7% over 2015 as a whole, are consistent with a drop in GDP of around 3.5% y/y in Q4. Worryingly, December’s activity figures, also released today, showed that activity weakened …
25th January 2016
The stronger-than-expected Polish activity data for December suggest that overall GDP may have expanded by as much as 4% y/y in Q4 of last year. … Polish Ind. Production & Retail Sales …
21st January 2016
The latest drop in the ruble to below 80/$ creates several headaches for policymakers and means that the chances of a cut in interest rates over the next month or so, which were already slim, have now evaporated. … What does the latest fall in the ruble …
20th January 2016
The Turkish central bank’s decision to keep its key interest rates on hold today, despite pressure on the lira and the deteriorating inflation outlook, adds to the impression that monetary policy moves are being swayed by government influence and will …
19th January 2016
There appears to be a great deal of confusion surrounding Russia’s fiscal plans for this year – including a mooted 10% cut in government spending that the cabinet has reportedly agreed this week. In this Update we attempt to set the record straight. Four …
15th January 2016
Polish National Bank Governor Marek Belka used this afternoon’s post-meeting press conference to warn incoming MPC members that there was little to warrant looser monetary policy, but with inflation likely to be weaker than expected, we think the …
14th January 2016
The renewed slide in oil prices has been an important factor behind the latest deterioration in sentiment towards EMs over recent weeks. However, with the obvious exception of Russia, most countries in Emerging Europe stand to gain from lower commodity …
13th January 2016
The lurch to a more populist policymaking agenda in Poland hasn’t made much difference to the near-term economic outlook, but it will harm medium-term growth prospects and, more immediately, depress asset prices. We’re revising down our zloty forecast – …
The fall in Russian inflation in December to 12.9% y/y provided the first clear sign that the impact of the 2014 ruble crisis has started to unwind. And we think that inflation is likely to decline further over the coming months. Nonetheless, the latest …
12th January 2016
The weak Czech inflation figure for December, of just 0.1% y/y, reinforces our view that the National Bank will extend its commitment to keeping policy loose. We expect the MPC use the next few policy meetings to pledge to keep the exchange rate ceiling …
So far as Russia is concerned, the best that can be said for 2016 is that it should be a year in which the economy stabilises. Even a marked rebound in oil prices would be unlikely to spur a return to reasonable rates of economic growth and consumers in …
11th January 2016
Turkey’s balance of payments data for November showed that exports remained weak. But, on a more positive note, the current account deficit continued to narrow and the figures also indicated that the composition of external financing improved. … Turkey …
Turkish industrial production expanded by a weaker-than-expected 3.5% y/y in November, but the data suggest that growth over Q4 as a whole was strong. … Turkey Industrial Production …
8th January 2016
Romanian National Bank Governor Mugur Isarescu gave little away at this afternoon’s post-meeting press conference, but the tone of the accompanying statement suggested that the MPC is concerned about both deteriorating sentiment towards emerging markets …
7th January 2016
December’s Economic Sentiment Indicators for Central and Eastern Europe suggest that activity may have eased a little from November. Even so, it looks like growth over Q4 as a whole was stronger than in Q3, at close to 4% y/y. … Economic Sentiment …
The 0.5% y/y fall in Polish consumer prices was larger than we had expected and, coming alongside the latest fall in oil prices, raises the risk that inflation will remain in negative territory in the early part of this year too. … Poland Flash CPI …
4th January 2016
December’s manufacturing PMIs for Emerging Europe provided an early sign that the latest fall in oil prices has hit activity in Russia. Meanwhile, the stronger-than-expected Turkish inflation figure for December reinforces our view that the central bank …
The decision by the Turkish central bank to keep interest rates on hold, when hikes had been widely anticipated, will probably result in renewed concerns that the MPC’s decisions are being swayed by government pressure. The accompanying statement did …
22nd December 2015
The latest fall in oil prices has added to the uncertainty over the outlook for Russia’s economy. In this Update we revisit the mechanisms through which lower oil prices affect Russia and outline what might happen to the economy at various oil prices. … …
21st December 2015
Inflation still looks likely to rise in most EMs next year, despite the recent slump in oil prices. However, the rebound will now be more gradual, which will allow central banks in most economies to keep interest rates lower for longer. … Latest oil price …
The Russian ruble was the worst performing EM currency over the past month, tumbling by 6% against the US dollar on the back of the latest decline in oil prices. But currencies elsewhere in the region have been the best performers in the EM world this …
17th December 2015
The latest batch of Russian activity data, released today, show that the recovery slowed last month and, worryingly, this came before the latest fall in oil prices. In contrast to Russia, November’s economic data from Poland point to strong growth of …
The Czech National Bank’s MPC once again struck a dovish note in the post-meeting statement and, although the Council didn’t extend its commitment to the koruna cap beyond next year (as we thought might happen), we still expect monetary conditions to …
16th December 2015
The accompanying press release to today’s MPC decision in Hungary, at which the deposit rate was left unchanged at 1.35%, was dovish and suggested that unconventional measures to loosen policy will be taken. As a result, although we don’t expect cuts in …
15th December 2015
The accompanying statement to today’s MPC meeting in Russia, at which the repo rate was left unchanged, was decidedly cautious and it’s clear that policymakers are waiting for firmer signs that inflation is easing. CPI figures published over the coming …
11th December 2015
Economic performances have diverged markedly across Emerging Europe this year, due in large part to the collapse in oil prices. Lower energy costs have kept inflation low in Central and South Eastern Europe, boosting real incomes and allowing monetary …
The sharp pick-up in Turkish GDP growth in Q3, to 5.4% y/y, may help to alleviate some of the political pressure on the central bank to keep policy loose. This reinforces our view that the central bank will raise interest rates at this month’s MPC …
10th December 2015
