Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Recep Tayyip Erdogan declared that his victory in yesterday’s presidential election marked a ‘new era’ for Turkey. But for the economy it is likely to mean more of the same. The economic imbalances that were allowed to build during the latter years …
11th August 2014
The raft of second quarter GDP data due to be published next week is likely to show that the recovery in Central and South Eastern Europe lost steam. Worryingly, having made a bright start to Q2, activity in the region weakened towards the end of the …
8th August 2014
The economic impact of Russia’s decision to ban imports of some foodstuffs from the EU, the US and other western countries is extremely uncertain, but it seems likely that the biggest loser will be Russia itself. In contrast, while some European …
7th August 2014
The deepening political crisis between Russia and the US/Europe means that the uncertainties attached to economic forecasts are even greater than usual. In these circumstances it makes more sense to think about how political developments might play out …
6th August 2014
Governor Isarescu opened the door to further interest rate cuts in Romania at today’s post-MPC meeting press conference. Much will depend on inflation data for July and August, due to be released before the next meeting at the end of September. For our …
4th August 2014
July’s manufacturing PMIs from Emerging Europe were, in aggregate, a little better than June’s figures. But they were still weaker than their average over the first half of the year. What’s more, much of the improvement came in Hungary and Russia, where …
1st August 2014
The National Bank of Hungary is due to introduce a new benchmark monetary policy instrument tomorrow. While this is unlikely to have any impact on domestic monetary conditions, policymakers have argued that it will go some way to reducing some of the …
31st July 2014
The latest package of sanctions adopted by the EU and the US against Russia will affect the economy in different ways. In the short-term, restrictions on access to western capital markets for selected banks and businesses have the potential to do the most …
The Czech MPC struck an even more dovish note at today’s post-meeting press conference. Policymakersextended their pledge to intervene in the FX market to prevent the koruna from appreciating beyond 27/€to 2016. What’s more, a shift in the language in the …
The Russian central bank caused a surprise earlier this month by hiking its one-week repo rate in a pre-emptive move to limit capital outflows ahead of a fresh sanctions imposed by the US and EU. This decision stood in stark contrast to the rest of the …
30th July 2014
The renewed violence in eastern Ukraine, the imposition of fresh sanctions by the US and the threat of further moves by the EU have weighed on Russian equities. But the recent falls haven’t been as large as those seen during previous bouts of tensions. …
28th July 2014
Russia’s central bank justified its surprise decision to hike interest rates this morning on stubbornly high inflation, but it’s pretty clear that this is a pre-emptive move to limit capital outflows ahead of possible new sanctions by the US and Europe. …
25th July 2014
The possibility that the EU might follow in the steps of the US and restrict access to capital markets for some Russian firms, coupled with Moscow’s decision this week to cancel another government bond auction, has raised concerns as to how Russia would …
24th July 2014
Inflation across the EM world remains relatively low in aggregate terms, even if it is still worryingly high in a handful of countries. Looking ahead, with global food prices falling, and underlying inflationary pressures still low, we expect inflation in …
The recent rally in the Turkish markets appears to have been driven by expectations of continued loose monetary policy in the developed world coupled – dare we say it – with a reasonable amount of complacency on domestic economic risks. Indeed, the …
23rd July 2014
The muted reaction in Russian markets to the growing likelihood of additional economic and financialsanctions by the EU probably reflects two things. The first is the widespread assumption that Europe willmove slowly and ultimately undertake only modest …
22nd July 2014
The National Bank of Hungary cut its benchmark interest rate by more than both we and the consensus expected earlier today, but followed this up with comments that its two-year long easing cycle is now at an end. Looking ahead, the benign inflation …
June’s activity data have dented hopes of a sustained recovery in the Russian economy. A meaningful turnaround will require a significant rise in investment. But the latest round of sanctions on Russia, announced yesterday by the US and EU, will only make …
17th July 2014
The Turkish central bank continued to loosen monetary conditions today and pressure from the government means that further rate cuts look likely over the coming months. However, given the backdrop of high inflation and a large external financing …
The decision by the National Bank of Ukraine to raise its discount rate earlier today serves as a reminder that, in spite of some positive developments over the past couple of months, the country’s balance of payments position is still extremely fragile. …
16th July 2014
The vulnerabilities in Emerging Europe’s banking sectors have come back into the spotlight in recent weeks. However, our latest Banking Heat Map shows that while there are some parts of the region where financial sectors are still fragile and problems are …
14th July 2014
The latest batch of activity data suggests that growth in Central Europe may be losing steam. Coming alongside signs that the German economy is also losing momentum, this suggests that the pace of the recovery in Central Europe is likely to slow over the …
9th July 2014
Recent concerns about the risk of deflation in Poland have prompted the National Bank to raise the possibility of a cut in interest rates later in the year. As it happens, most indicators of underlying price pressures suggest that the risk of a drop into …
8th July 2014
Domestic demand has been subdued across much of Emerging Europe over the past five years in part due to the fact that households and firms have been deleveraging following the credit boom of the past decade. But while there has been a significant …
7th July 2014
The Czech National Bank (CNB) struck a dovish note at last week’s MPC meeting and is clearly concerned about the threat of deflation. For now, we suspect that the Bank is unlikely to take further action to ease policy. But there is a real risk that …
4th July 2014
The National Bank of Poland’s MPC struck a dovish note at this afternoon’s post-meeting pressconference, with Governor Belka flagging the possibility of an interest rate cut in the coming months. Thedecision looks finely balanced although, as things …
2nd July 2014
Last month’s manufacturing PMI data for Emerging Europe were disappointing. The recovery in Central Europe appears to have lost momentum in Q2, while the data provide further evidence that the Turkish economy is slowing. Elsewhere, the Romanian central …
1st July 2014
The latest activity data suggest that growth across Emerging Europe has strengthened in recent months, but there are a few clouds on the horizon. For a start, the latest data from Germany, the largest export market for much of the region, have softened. …
30th June 2014
Having kept interest rates on hold earlier today, the Czech MPC maintained its dovish stance at the post meeting press conference. Given the subdued outlook for inflation, monetary conditions are likely to stay extremely loose. We expect the two-week repo …
26th June 2014
A series of conciliatory remarks from both the Russian and Ukrainian authorities in recent days has given rise to hopes that tensions in Eastern Ukraine may start to ease. But despite promising signs at a government level, there are no signs yet that …
25th June 2014
The recent increase in oil prices is unlikely to have much of an impact on EM inflation, which in most places looks set to remain fairly benign. … Recent increase in oil price poses little threat to EM …
24th June 2014
Having cut its benchmark interest rate earlier today, the National Bank of Hungary gave a pretty clear signal in the accompanying communiqué that further rate cuts are on the cards and that monetary policy is set to remain loose for a considerable time. …
The muted reaction in the financial markets to the scandal currently engulfing the Polish government is testament to the economy’s underlying strength as well as the quality of the country’s institutions. Nonetheless, the latest events reduce the …
The nationalisation of the troubled Bulgarian bank, Corporate Commercial Bank, over the weekend has put attention back onto Emerging Europe’s fragile financial sector. Given the rise in non-performing loans, both in Bulgaria and in the rest of the region, …
23rd June 2014
May’s raft of Russian activity data suggests that, following a weak Q1, the economy hasn’t made a meaningful recovery in Q2. The rebound in the manufacturing sector has continued to gain momentum, but consumer-facing sectors have slowed. Meanwhile, …
20th June 2014
The strength of the recovery in Hungarian consumer spending has taken many, ourselves included, by surprise and retail sales are now rising at their fastest pace in a decade. However, this has been supported by government policies to reduce inflation and …
19th June 2014
Emerging European equities have rebounded over the past month, driven by Russian stocks. However, this has merely recouped losses seen earlier in the year. Looking ahead, we’re relatively downbeat on the outlook for Russian equities and the ruble, but …
18th June 2014
The Central Bank of Russia was never likely to alter interest rates at its meeting today – while the economy remains weak, high and rising inflation limits the room for policy support. Meanwhile, news that Russia has cut gas supplies to Ukraine following …
16th June 2014
The pre-crisis boom years in Central and Eastern Europe (CEE) led to an erosion of external competitiveness which is one reason why the recovery from the 2008-09 crisis has been so sluggish. But following five years of weak wage growth and currency …
11th June 2014
The Turkish economy held up well in Q1, in spite of a deepening political crisis and an aggressive hike in interest rates. However, growth was boosted by an improvement in Turkey’s gold trade balance, which is unlikely to last. More fundamentally, there …
10th June 2014
There are growing concerns that, as the euro-zone flirts with deflation, Central Europe could suffer a similar fate. However, the drivers of the deflation threat in the region are different and seem to be less pernicious to those in the euro-zone. Indeed, …
9th June 2014
Turkish Q1 GDP data due tomorrow are likely toreinforce optimism in the markets that the economyis undergoing a smooth rebalancing, with netexports taking over from domestic demand as themain driver of growth. However, while we wouldn’tdismiss rebalancing …
Yesterday’s move by the ECB is another reason to think that monetary policy in Central and Eastern Europe (CEE) will remain loose for longer than most people expect. However, the impact of the ECB’s announcement on financial markets in CEE has been …
6th June 2014
Growth in Emerging Europe is set to remain sluggish over the next couple of years, due in large part to continued weakness in the region’s largest economy, Russia, and a looming slowdown in the region’s second largest economy, Turkey. However, while …
4th June 2014
The Polish National Bank’s Governor, Marek Belka, was more dovish at this afternoon’s post-meeting press conference, and didn’t rule out the possibility of a cut in interest rates this year. However, while inflation is likely to remain extremely subdued, …
3rd June 2014
The rebound in Russian industrial production has taken many, including us, by surprise and has been interpreted by some as a sign that a weaker ruble has started to provide support to industry. However, a closer look at the data reveals that much of the …
2nd June 2014
At first glance, the sharp fall in Poland’s manufacturing PMI in May suggests that the economy has lost some steam, perhaps due to spillovers from the crisis in neighbouring Ukraine. However, it’s worth noting that other surveys as well as April’s …
The breakdown of Polish Q1 GDP data showed that the drivers of the recovery are broadening from exports to domestic demand. And it looks like the economy strengthened further at the start of the second quarter. All told, we think the economy should be …
30th May 2014
Russian equities and the ruble have been the region’s best performers over the past month following conciliatory remarks from Russia’s President Putin as well as Petro Poroshenko’s victory in Ukraine’s presidential election. Nonetheless, we think this …
29th May 2014
The Turkish government is becoming increasingly vocal in its demands for the central bank to cut interest rates, arguing that high interest rates risk making the lira overvalued which would damage external competitiveness. However, this distracts from the …
28th May 2014
