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The weakness of August’s activity data for Russia is partly due to working day effects since August of this year had one fewer working day than August of 2012. Even so, today’s data reinforce our view that despite signs of recovery in other parts of the …
18th September 2013
Having been promised “surprise” measures to shore up the lira by Governor Basci, today’s Turkish rate setting meeting was a non-event. Policymakers appear to be waiting to see how the financial markets react to tomorrow’s FOMC meeting, at which the US …
17th September 2013
Emerging Europe has been the laggard of the emerging world over the past few years, due in large part to problems in its banks. But with the region seemingly on the mend, might local banking sectors now support growth? In this Watch , we show that while …
The Central Bank of Russia today laid out plans to revamp and streamline the instruments through which it provides liquidity to banks. Over time, these should help to increase transparency but they won’t have any impact on immediate monetary conditions. …
13th September 2013
At first sight, the stability of the hryvnia over the past few months suggests that Ukraine has been relatively insulated from the sharp sell-off in other emerging markets. But a closer look reveals that currency stability has been achieved thanks to …
11th September 2013
Following today’s stronger-than-expected Turkish Q2 GDP data, we are revising up our growth forecast for this year as a whole. However, growth was driven by credit-fuelled consumer spending and a rebound in inventories, neither of which appear …
10th September 2013
Despite continued high oil prices, Russia’s current account surplus has fallen from around 7% of GDP prior to the 2008/09 crisis to around 2% now and is on track to slip into a deficit by 2015. Given its large foreign currency reserves, Russia could …
6th September 2013
Governor Belka provided few clues at his post-MPC press conference about when the Polish National Bank might shift towards tightening mode. But with the economic recovery unlikely to be accompanied by a substantial rise in inflation, we think the MPC may …
4th September 2013
The breakdown of GDP data for Central and South Eastern Europe confirmed that the acceleration in growth seen in Q2 was largely a result of stronger demand from the euro-zone. But there were also encouraging signs of a long-awaited turnaround in consumer …
The severity of the slowdown in the Polish economy over the past 18 months took commentators and policymakers by surprise. The good news is that the slowdown appears to have been largely cyclical in nature and that most of Poland’s previous drivers of …
3rd September 2013
The raft of manufacturing PMIs across Central Europe for August provide further evidence that the region’s recovery is gathering pace, helped by the improvement in the German economy. In contrast, although the PMIs improved in Russia and Turkey, their …
2nd September 2013
The breakdown of Q2 Polish GDP data underlined that its tentative economic turnaround is largely a result of stronger external demand. But with the recovery in the euro-zone set to be modest, growth in Poland is likely to be fairly weak by past standards. …
30th August 2013
It’s been a good month for Central Europe, although the news elsewhere in the region has been less encouraging. A raft of preliminary Q2 GDP data showed that, although growth remains weak in Central Europe, it is accelerating. What’s more, forward-looking …
28th August 2013
The Turkish central bank appears ready to add to its policy toolkit in order to support the lira. No details have been provided yet, but our best guess is that, if new measures are introduced, they are likely to involve restricting the amount of foreign …
The fact that the Hungarian central bank cut interest rates by just 20bp today highlights that, even though the forint came through the recent EM sell-off relatively well, Hungary is still highly exposed to any slowdown in capital inflows. We expect a …
27th August 2013
The sell-off in emerging market (EM) currencies this month is unlikely to have much of an impact on EM-wide inflation. Indeed, looking ahead, we think the outlook for EM inflation is fairly benign. … Currency weakness unlikely to cause EM inflation to …
22nd August 2013
The ruble has fared surprisingly well during the latest EM sell-off, in large part due to the fact that oil prices have edged up over recent weeks. Nonetheless, the ruble is still weaker than the usual relationship with oil prices would otherwise imply. …
Emerging European currencies have generally withstood the recent EM financial market sell-off relatively well. Meanwhile, equities in Central Europe have made strong gains over the past month. … Coming through the EM sell-off relatively …
21st August 2013
The further hike in Turkish interest rates today merely underlines how vulnerable the economy is to the recent slowdown in capital inflows. Looking ahead, much will depend on how the current EM sell-off pans out and whether the lira comes under further …
20th August 2013
This report is only available as a PDF. Click to download. … Russia: a modest improvement, but growth remains weak …
19th August 2013
The slump in Q2 growth in Russia reported last week appears consistent with the economy having fallen into recession during the first half of 2013. The good news is that barring an unforeseen external shock (for example a sharp fall in oil prices), the …
16th August 2013
Turkey’s economy has picked up pace over the first half of this year, but this has been fuelled by a sharprise in credit and has come at the expense of a renewed widening of the current account deficit. This is afamiliar pattern. Indeed, over the past 19 …
15th August 2013
Growth in Central Europe accelerated in Q2, helped by improving conditions in the euro-zone, but the economies of South Eastern Europe seem to have weakened once again. The potential for further flare-ups in the euro crisis means that the path ahead is …
14th August 2013
Second quarter GDP data from Russia were not only much weaker than expected – according to our estimates they are also consistent with the economy having fallen into recession during the first half of this year. … Russia enters …
9th August 2013
The Central Bank of Russia kept interest rates on hold today, but the accompanying statement provides some hints that policy may start to be eased over the coming months. Even so, dramatic cuts in interest rates remain unlikely. We’ve pencilled in a 75bp …
The raft of GDP data due over the next few weeks is likely to show that growth in Emerging Europe picked up in the second quarter of this year. However, while the region as a whole seems to have turned the corner, a meaningful recovery in its largest …
8th August 2013
The surprise decision by the National Bank of Romania (NBR) to accelerate the pace of policy easing reflects several factors, including a growing conviction that inflation will fall back by the end of this year and the insurance offered by a new …
5th August 2013
The Czech National Bank kept interest rates on hold at 0.05% today, but the post-meeting press conference provided the clearest signs yet that some policymakers are keen to adopt unconventional policy easing. At the moment, the MPC appears to be divided …
1st August 2013
July’s manufacturing PMI surveys suggest that the recovery that started in Poland and the Czech Republic towards the end of the second quarter continued in the first month of the third quarter. Both countries remain vulnerable to a relapse in the …
The slowdown in Emerging Europe appears to have bottomed out in recent months and there are tentative signs of a turnaround in regional growth. At a country level though, it’s actually been a disappointing few months for the region’s two biggest …
29th July 2013
The stimulus measures agreed by Russia’s cabinet yesterday are unlikely to radically transform the outlook for the economy. We continue to expect a modest recovery over the second half of this year, but the key point remains that structural reforms rather …
26th July 2013
Emerging market inflation rose last month, but the combination of soft core price pressures and falling global food price inflation means that any further increases are likely to be limited. … EM inflation turns around, but big pick-up …
24th July 2013
Financial markets across Emerging Europe have recouped some of their losses from the sell-off last month. Looking ahead, we see some scope for gains in the region’s equities and currencies over the next 18 months or so. However, we’re relatively downbeat …
The National Bank of Hungary’s commitment to cut interest rates to a new record low of 3.0-3.5% over the coming months appears to be a bold step into the world of “forward guidance”. But the reality is more mundane. The “new framework” announced by …
23rd July 2013
In a statement last week the governor of Turkey’s central bank, Erdem Basci, gave markets a strong steer that interest rates would be raised at tomorrow’s MPC meeting. But this is unlikely to result in a hike in the benchmark one-week repo rate. Instead, …
22nd July 2013
Hungary has been buoyed by a raft of good news over the past few months. Q1 GDP data showed that the economy exited recession, the budget deficit has narrowed to the extent that the European Commission lifted the country out of its excessive deficit …
18th July 2013
There is little evidence in June’s activity data that Russia’s struggling economy is about to turn the corner. All told, it seems that GDP grew by around 1.5-2.0% y/y in the second quarter – broadly unchanged from the pace of expansion in Q1, which itself …
17th July 2013
The suggestion by some commentators that the new lending facility unveiled by the Central Bank of Russia last week amounts to a form of quantitative easing seems wide of the mark. All the signs so far are that lending under the new facility will simply …
16th July 2013
The fall in the lira and the sharp rise in bond yields over the past month have cast the spotlight back onto Turkey’s persistent current account deficit and dependency on foreign capital inflows. At the root of this problem lies the country’s low domestic …
15th July 2013
Russia’s Central Bank kept its benchmark interest rates unchanged at its first meeting under the new governor, Elvira Nabiullina, confirming our view that the change in leadership at the CBR is unlikely to result in a major change in the policy stance. As …
12th July 2013
There are encouraging signs that the slowdown in Emerging Europe has bottomed out in recent months and we think growth should strengthen over the second half of this year. The recovery will remain fragile though, and vulnerable to periodic flare-ups of …
10th July 2013
The scale of yesterday’s intervention by the Turkish central bank to defend the lira underlines the vulnerabilities that have built in the country’s economy. We are tweaking some of our forecasts, but the key message is that economic growth is likely to …
9th July 2013
The slump in Ukrainian FX reserves to a six-year low serves as a reminder that Ukraine’s fragile external position continues to keep it one step away from a full-blown balance of payments crisis. … Ukraine: FX reserves drop to 6-year …
8th July 2013
Following today’s cut in Polish interest rates, we now expect rates to be kept on hold until 2015. If anything though, the risks to this forecast lie on the downside. Elsewhere, there are concerns that the sharp jump in Turkish inflation last month could …
3rd July 2013
Today’s cut in Romanian interest rates is likely to be followed by further policy easing over the coming months. However, the scope for aggressive loosening is limited by the country’s high level of FX debt. All told, we expect the National Bank to lower …
1st July 2013
The latest batch of Emerging European manufacturing PMIs adds to the growing sense that things are improving in the region. This reinforces our view that growth in the second half of this year is likely to be stronger than in the first. Even so, we still …
Our latest Banking Heat Map suggests that credit conditions in most countries in Emerging Europe remain extremely tight. The main exception is Turkey, where credit growth has accelerated again in recent months, albeit at the expense of growing …
28th June 2013
The latest activity data from Emerging Europe provide some grounds for cautious optimism. Growth in the highly open Central European economies appears to be picking up, albeit from low rates. And while there’s no sign yet of a recovery in Russia and …
26th June 2013
Policymakers in Hungary and Poland look set to cut interest rates at least once more, probably next month, but we think easing cycles are nearing an end in both countries. … Hungarian and Polish easing cycles nearing an …
25th June 2013
The debate over the role of policy stimulus in reviving Russia’s flagging economy has been given extra impetus over the past week by the release of the IMF’s latest Article IV report, which argues that looser policy would do little to support growth. But …
21st June 2013
