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Polish deflation eased a little in June, but this was entirely the result of smaller falls in food and energy prices than in May. Meanwhile, it looks like core inflation edged down a little. … Poland Consumer Prices …
15th July 2015
The collapse in Russian industrial output in the second quarter appears to have been driven by the unwinding of one-off supports to a couple of sectors, as well further weakness in domestic demand. The boost to food production from the ban on food imports …
14th July 2015
The mechanisms through which the deepening crisis in Greece could spill over to banking sectors in Emerging Europe are complex and commonly misunderstood. However, as we explain in this Watch, they have the potential to be explosive. … “Grexit” and the …
9th July 2015
There are signs that the slump in the Russian economy is now close to bottoming out. However, we think that when the recovery does come, it is likely to be extremely weak at best. One reason for this is the fact that Russia now faces a large fiscal …
The small rise in Czech headline and core inflation in June provides early evidence that the recent labour market improvements and the strength of domestic demand are starting to feed through to consumer prices. At the margin, these data may prompt the …
The statement accompanying today’s Polish MPC meeting, at which the policy interest rate was left unchanged, sounded relatively sanguine on the risks posed by the deepening crisis in Greece to the growth and inflation outlook. Accordingly, we remain …
8th July 2015
The slowdown in Turkish industrial production growth in May, to 2.4% y/y, appears to be a result of strikes in the automobile sector. And, overall, the data still suggest that the economy expanded at a quicker pace in Q2 than in Q1. Elsewhere, the small …
The sharp slowdown in industrial production growth in both the Czech Republic and Hungary in May was distorted by working day effects. The underlying trend is one ofsteady growth in industry of around 5% y/y. … Czech & Hungary Industrial Production …
7th July 2015
The drop in Saudi Arabia’s ‘whole economy’ PMI to a record low last month suggests that growth has slowed in the second quarter. Elsewhere, after a disappointing start to the year, Egypt’s economy is finding its feet again. … Russia CPI …
6th July 2015
The sharp drop in Turkish inflation last month, to 7.2% y/y, was driven almost entirely by a fall in food inflation, while core price pressures remain worryingly strong. Moreover, in contrast to the consensus, we still think that inflation will rise, not …
3rd July 2015
Utility tariffs for Russian households and businesses were raised at the start of this month, fuelling concerns in some quarters that this could trigger a renewed pick-up in inflation. But the key point is that what matters for inflation is the difference …
2nd July 2015
The Greek crisis has cast a dark cloud over the outlook for Emerging Europe, but as we explain in this Focus , while “Grexit” is a risk for a few countries, it doesn’t present the same threat that it once did. We think growth in the region’s largest …
The National Bank of Romania pinned its decision to keep interest rates on hold earlier today (rather thancut them further) on concerns about contagion from the Greek crisis. And judging by the accompanyingpress release, the MPC seems to have taken the …
1st July 2015
Last month’s manufacturing PMIs for Emerging Europe provide further evidence thatthe Central European economies have shrugged off the deepening crisis in Greece.The surveys also suggest that the slump in the Russian economy may be close tobottoming out. …
With Greece’s bailout talks postponed (again), the country’s membership of the euro-zone is lookingprecarious. In this Update, we provide a primer on what “Grexit” might mean for Emerging Europe. … A primer on the implications of “Grexit” for Emerging …
26th June 2015
EM inflation is set to accelerate in the months ahead as downward pressure from thefall in oil prices late last year unwinds. This will ease concerns about deflation in anumber of EMs, including China. It will also bring an end to monetary policyloosening …
Having kept its policy interest rate and exchange rate ceiling unchanged earlier today, the Czech MPC struck a less dovish note at this afternoon’s press conference. For now, we remain of the view that the Council will keep interest rates near zero and …
25th June 2015
The deepening crisis in Greece has been met with a muted reaction in the financial markets inEmerging Europe and there are few signs that it has had any impact on economic activity in theregion. Nonetheless, the threat of “Grexit” has understandably cast …
The press release accompanying today’s decision by the National Bank of Hungary to lower its policy interest rate by 15bp to 1.50% hinted that the easing cycle has a little further to run. We have revised our rate forecast and have pencilled in an …
23rd June 2015
The Turkish central bank kept its key interest rates on hold today, but the accompanying statement suggested that the MPC remains too sanguine on the inflation outlook and the risks posed by the large current account deficit, particularly amid the current …
May’s activity data brought further bad news for the Russian economy, with the slump in industry and fixed investment deepening. All in all, our GDP Tracker suggests that output may have contracted by over 5% y/y last month. … Russia Retail Sales, …
18th June 2015
Polish activity data for May were a mixed bag, with strengthening consumer spending broadly offsetting weakness in industry. Overall, it looks like GDP may have grown by around 3.5% y/y, roughly in line with Q1’s outturn. … Polish Ind. Production, …
There appears to be a great deal of confusion about how Russia can use its oil funds to finance its budget deficit, with some arguing that by drawing them down in rubles the government can both finance domestic spending and preserve the value of its …
16th June 2015
The sharper-than-expected fall in Polish consumer prices last month reinforces our view that the central bank will be under little pressure to raise interest rates any time soon. The market, which is pricing in a rate hike before the end of the year, …
15th June 2015
The Russian central bank cut its one-week repo rate by 100bp, to 11.5%, at today’s MPC meeting, but struck a more cautious note on the near-term outlook for inflation. As a result, while we expect interest rates to be lowered further over the rest of this …
The clock is ticking for Greece to unlock much-needed funding and stay in the euro-zone. And if it fails and were to leave the single currency, the impact of this wouldn’t be felt in Greece alone. In this Watch , we explain that while Eastern Europe’s …
11th June 2015
Even though Turkey’s current account deficit narrowed in April, the bigger picture is that it remains large. And the composition of external financing is a key vulnerability, with foreign direct investment now only covering a tenth of the shortfall. … …
We wouldn’t get carried away by the better-than-expected 2.3% y/y rise in Turkish GDP in Q1. This stronger outturn was caused by a sharp pick-up in consumer spending, which came at the cost of a lower domestic savings rate and a wider current account …
10th June 2015
The Turkish lira has stabilised today, but it remains vulnerable to further weakness. Faced with another leg down, we think the central bank might in the first instance lower the FX depo rate or scale up FX sales. But in the event of a sharp sell-off, …
9th June 2015
Stronger-than-expected inflation figures for last month in both the Czech Republic and Hungary will remove any lingering concerns about deflation. However, large amounts of spare capacity will keep inflation low over the coming 18 months or so, allowing …
The market’s reaction to Sunday’s inconclusive Turkish parliamentary election was overwhelming negative. In this Update , we outline three scenarios to show how the political situation might develop. … After the election: what next for Turkish …
8th June 2015
The loss by Turkey’s AK Party of its parliamentary majority for the first time since 2002 makes President Erdogan’s desire to change the constitution to strengthen the presidency a pipe dream and should in time help to dampen concerns about an …
Emerging Europe’s economy is likely to contract this year for the first time since 2009, but prospects differ substantially across the region. In Russia, while financial strains have eased, the outlook for the real economy remains bleak. Meanwhile, Turkey …
5th June 2015
The drop in Russian inflation to 15.8% y/y in May confirms that it has now passed its peak. We expect inflation to ease slowly over the next three to six months before falling sharply around the turn of the year. … Russia CPI …
4th June 2015
The Polish MPC’s press release, which followed the decision to leave interest rates unchanged earlier today, suggested that the Council is slightly more upbeat on the economy’s growth prospects and even less concerned about deflation than last month. But …
3rd June 2015
The rise in Turkish inflation in May, to 8.1% y/y, was driven by a pick-up in core price pressures and provides further evidence that the economy’s inflation problems are escalating. Elsewhere, Hungary’s retail sales figures for April suggest that, while …
Fears ahead of Turkey’s parliamentary election on 7th June have centred on the risk of a dominant and increasingly authoritarian AK Party under President Erdogan , but in another twist to the plot the latest opinion polls suggest that the election might …
1st June 2015
May’s batch of manufacturing PMI data for Emerging Europe provided further evidence that the slump in the Russian economy has deepened in the second quarter. But the surveys finally brought some positive economic news for Turkey’s President Erdogan ahead …
Financial markets in Emerging Europe have generally performed poorly over the past month, with equities having dropped back and the region’s bonds having been hit by the sell-off in developed economies’ debt markets. The Turkish lira has strengthened over …
28th May 2015
May’s Economic Sentiment Indicators (ESIs) for Eastern Europe were a mixed bag, but overall the surveys still point to strong growth. There were few signs that the unfolding problems in Greece have had any impact on confidence in the region. … Economic …
The slump in activity data for April put an end to hopes raised in some parts of the government (and markets) that the worst is over for the Russian economy. The steep falls in output are likely to be concentrated in the first half of the year, but there …
27th May 2015
The big drag on EM inflation from the drop in commodity prices over the second half of last year will ease over the coming months. With inflation set to rise in most EMs over the second half of this year, the bulk of policy easing across the emerging …
This report is only available as a PDF. Click to download. … Window for further Hungarian rate cuts is closing …
26th May 2015
Victory for Andrzej Duda of the Law and Justice Party in Sunday’s Polish presidential election has raised concerns about a shift towards more populist policymaking and taken some of the shine off Emerging Europe’s best growth story. This doesn’t mean that …
Today’s raft of activity data suggests that the slump in Russia’s economy deepened further at the start of Q2. Output appears to have fallen by about 4.0% y/y in April. This should dash any remaining hopes for a swift recovery in Russia. … Russia Retail …
22nd May 2015
The raft of preliminary first quarter GDP data showed that, in contrast to most of the emerging world, growth in Central Europe strengthened. This came on the back of easing fiscal austerity, looser monetary conditions and, most noticeably, the windfall …
21st May 2015
The weakness of last month’s Polish industrial production and retail sales figures was disappointing, but the impact on overall GDP growth seems to have been partially offset by an improvement in the construction sector. At the margin, these data may …
20th May 2015
The press release accompanying today’s Turkish MPC meeting, at which interest rates were left unchanged, suggests that policymakers are increasingly concerned about the inflation outlook. But we still think the Council is failing to acknowledge the full …
The latest developments regarding Ukraine’s debt restructuring, including a law passed by parliament today which allows the government to renege on payments if needed, are themselves of little significance. But they do indicate that both parties are …
19th May 2015
