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This publication has been updated with additional analysis from the post-meeting press statement and press conference. 75bp cuts to continue for the time being The Hungarian central bank (MNB) cut its base rate by 75bp again today (to 10.75%), and we …
19th December 2023
Inflation and interest rates will fall across Central and Eastern Europe in 2024 and an economic recovery is likely to take hold across the region. But the task of bringing inflation back to central banks’ targets will take time and we think that monetary …
Russia’s economic hit: just how large? Analysis by the US Treasury Department published this week gained a lot of attention for highlighting that Russia’s economy is now 5% smaller due to the war and sanctions than it otherwise would have been. The blog …
15th December 2023
Sharp fall in inflation adds to pressure for rate cuts, but caution likely for now The larger-than-expected fall in Israeli inflation to 3.3% y/y in November suggests that the inflationary impact of the war and the sharp rise in government spending have …
CBR slows down tightening, cycle not yet over Russia’s central bank (CBR) delivered a 100bp interest rate hike at today’s meeting, to 16.00%, and we still think that strong inflation pressures will force another rate hike in Q1. Today’s hike was in line …
Turkey’s gross international reserves have hit a record high recently which, on the face of it, suggests that the policy U-turn since May has helped to diminish the country’s balance of payments vulnerabilities. But the central bank’s large on- and …
14th December 2023
Economy slowing at the start of Q4 The further softening in Turkish retail sales and industrial production growth in October suggests that the slowdown in the economy continued at the start of Q4. We think it’s possible that GDP contracts outright this …
13th December 2023
Sharp fall in inflation, but rates likely to be left on hold next week The fall in Czech inflation to 7.3% y/y in November means that the start of a monetary easing cycle at next week’s policy meeting is still very much a close call. But at this stage we …
11th December 2023
Price pressures continue to mount The rise in Russian inflation to 7.5% y/y in November is likely to be followed by further increases in the coming months as the economy continues to overheat. We think this CPI release supports the case for a 100bp …
8th December 2023
What we’ve learned from the State Tribunal drama The debate around whether Polish central bank governor Glapinski could be brought before the State Tribunal and be removed from his post took more twists and turns this week. But at this stage the events …
Overview – Inflation and interest rates will fall across Central and Eastern Europe (CEE) in 2024 and an economic recovery is likely to take hold across the region. But the task of bringing inflation back to central banks’ targets will take time and we …
7th December 2023
Easing cycle paused The National Bank of Poland (NBP) left interest rates on hold as expected today, and we think the easing cycle will remain on pause until the end of Q1. With the economy recovering and the disinflation process likely to stall over the …
6th December 2023
This publication has been updated due to an error in the previous version. Further evidence of easing price pressures The small rise in Turkish inflation to 62.0% y/y in November adds to evidence that inflation pressures in the economy continue to cool. …
4th December 2023
Investors increased their expectations for interest rate cuts by the ECB after November’s soft euro-zone inflation print this week, but in parts of Central and Eastern Europe (CEE) the latest developments suggest inflation will take a lot longer to fall …
1st December 2023
This page has been updated with additional analysis since first publication. CEE turning a corner The manufacturing PMIs in Central and Eastern Europe (CEE) rose in November suggesting that industrial sectors in the region are turning a corner, while …
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
Disinflation process entering a slower phase The small fall in Polish inflation to 6.5% y/y in November is likely to mark the start of a slower phase for the disinflation process over the coming months. Against this backdrop, we think the central bank …
GDP growth slowing, more to come The sharp slowdown in Turkish GDP growth to 0.3% q/q in Q3, together with more timely figures for Q4, suggest that the economy is rebalancing in response to the policy tightening this year. With the central bank set to …
Economy showing further signs of overheating Russia’s economy looks to have started Q4 on fairly solid footing and we think GDP growth of 3.0-3.3% this year is now highly likely. Support from loose fiscal policy and a strong labour market should keep GDP …
29th November 2023
This page has been updated with additional analysis since first publication. CEE recovery continuing in Q4 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally rose in November, and suggest that activity …
Central bank in “wait and see” mode Israel’s central bank left interest rates on hold at 4.75% again today and the communications continued to emphasise risks to the inflation outlook. But policymakers provided the first hint that an easing cycle could be …
27th November 2023
CBRT bringing tightening cycle to a close Turkey’s central bank (CBRT) delivered another chunky 500bp rate hike to 40% this week but it also signalled that its tightening cycle was very close to an end. The local elections in March may be playing a part …
24th November 2023
Our Emerging Europe Chart Pack has been updated with the latest data and our analysis of recent developments. Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in slower growth in 2024. Inflation will …
23rd November 2023
CBRT delivers another large hike, end of tightening in sight Turkey’s central bank (CBRT) delivered another 500bp interest rate hike, to 40.0%, at today’s meeting and suggested that it is very close to the end of the tightening cycle. A final 250bp hike …
The Israeli government’s budget deficit is widening sharply and we think it will breach 5% of GDP next year. Provided the length of the war and the increase in the deficit are short-lived, we don’t think this will cause funding problems and the …
22nd November 2023
This page has been updated with additional analysis since first publication. Consumption bouncing back The batch of Polish activity data for October provide clearer signs that the economy has turned a corner and that a recovery is taking hold, driven by …
Sticking to aggressive easing ... for now The Hungarian central bank (MNB) cut its base rate by another 75bp (to 11.50%) as expected today, and we think it will continue to lower rates in similar steps until the end of Q1. That said, with the disinflation …
21st November 2023
Easing inflation and stronger shekel Data out of Israel for October this week suggest that the initial impact of the conflict with Hamas on the export sector was fairly limited, that inflation pressures continued to ease and that the chances of an …
17th November 2023
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
Israel holds up well in Q3, but sharp drop coming in Q4 The slight slowdown in Israeli GDP growth to 2.8% q/q annualised in Q3 was more or less in line with expectations but comes before a likely sharp drop in Q4 amid the impact of the war with Hamas. …
Economy overheating, central bank has more work to do The rise in Russian GDP growth to 5.5% y/y in Q3 was larger than expected and adds to evidence that the economy continued to overheat last quarter. With fiscal policy set to loosen further and …
15th November 2023
The squeeze on Russia’s budget and current account positions has eased over the second half of this year, largely thanks to a rise in oil prices. Higher energy revenues next year should help to limit the impact of a surge in military spending on the …
Past the worst Q3 GDP figures out of Central and Eastern Europe (CEE) showed a mixed performance across the region, but as a whole CEE economies appear to be past the worst of the downturn. With households’ real incomes rising again after last year’s …
14th November 2023
Economy likely to have slowed sharply in Q3 Turkish retail sales and industrial production both fell again in m/m terms in September and GDP growth looks to have slowed sharply in the third quarter as a whole. The impact of policy tightening will take a …
13th November 2023
Climbing inflation will keep pressure on the CBR The further chunky rise in Russian inflation to 6.7% y/y in October provides additional evidence that demand is outstripping supply in Russia’s economy. We think that inflation will continue to rise over …
10th November 2023
Inflation risks stop CEE easing cycles in their tracks Communications from central bankers across Central and Eastern Europe (CEE) this week struck a decisively hawkish tone, suggesting that interest rates could be left on hold across most of the region …
Governments across Central and Eastern Europe (CEE) need to deliver significant fiscal tightening over the coming years to prevent public debt ratios from grinding higher. The risk of an imminent fiscal crisis across the region looks low relative to many …
9th November 2023
NBP pauses easing cycle, interest rates to stay high in 2024 The National Bank of Poland (NBP) surprised most analysts in pausing its easing cycle today, and we think that the scope to deliver further interest rate cuts over the coming year is quite …
8th November 2023
NBR yet to show signs of a dovish pivot The National Bank of Romania (NBR) left its policy rate on hold again at 7.00% today, and offered little evidence to suggest it is considering the start of an easing cycle just yet. We currently expect an easing …
Turkey’s central bank continues to impress Turkey’s central bank (CBRT) governor delivered another convincing message at this week’s Inflation Report briefing and suggested that further policy tightening will be delivered over the coming months. Governor …
3rd November 2023
Inflation eased a touch, peak approaching soon Turkish inflation unexpectedly fell to 61.4% y/y in October and while we think inflation is likely to rise again in the coming months, the peak is probably not too far away. The central bank’s aggressive …
This publication has been updated with additional analysis from the post-meeting press statement and press conference. CNB in ‘wait and see’ mode The Czech National Bank’s (CNB’s) decision to leave interest rates on hold again today, at 7.00%, was …
2nd November 2023
Retail sales continue to boom as industry comes off the boil Russian retail sales continued to expand at a strong clip in September, but industrial production growth was less impressive. Higher interest rates and inflation will weigh on activity in the …
1st November 2023
One question we have received frequently from clients is what lessons Israel’s previous wars offer when thinking about the effects on its economy from the conflict today. While no two events are the same, one lesson is that the near-term hit to economic …
This page has been updated with additional analysis since first publication. Another mixed bag of PMIs The manufacturing PMIs across Emerging Europe for October suggest that industrial activity in Russia remained resilient last month, while industrial …
Sharp fall in inflation, another interest rate cut incoming The drop in Polish inflation to 6.5% y/y in October was larger than expected and should pave the way for another 25bp interest rate cut by the central bank next week (to 5.50%). The decline from …
31st October 2023
Czech economy flirting with recession again The 0.3% q/q decline in Czech GDP in Q3 was worse than expected, and suggests that the economy will probably contract over the year as a whole. This weakness in the economy also increases the likelihood that the …
This page has been updated with additional analysis since first publication. Sentiment ticks up, recovery slowing taking shape The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were another mixed bag in October, …
30th October 2023
The string of central bank meetings across Emerging Europe this week highlighted the unique challenges that policymakers across the region are currently facing, but one common thread in all countries is that inflation risks are persisting and we think …
27th October 2023
CBR delivers a larger hike as fiscal risks mount Russia’s central bank (CBR) opted for a larger-than-expected 200bp interest rate hike, to 15.00%, at today’s meeting and, while policymakers seemed to signal that the tightening cycle is at an end, we think …
