Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
The raft of recently released data from Poland suggests that GDP growth may have slowed to around 3.0% y/y in Q2, down from 3.5% y/y in Q1. And we suspect that growth in the second half of the year will weaken further, opening the way for interest rate …
26th July 2012
Today’s Q2 economic report by the Russian Ministry of Economy confirmed an earlier forecast that GDP grew by 3.9% y/y in the second quarter, down from 4.9% y/y in Q1. We fear the slowdown may be a sign of things to come. … Russia: Q2 slowdown a sign of …
25th July 2012
The strength of Polish consumer spending over the past couple of years has only been made possible by a run-down in the household savings rate. But with the savings rate now at a record low and real income growth likely to remain subdued, we think that …
24th July 2012
While keeping interest rates on hold today, Turkey’s central bank is maintaining its policy of gradually easing monetary conditions. But given the combination of a still-large current account deficit and a sharp rise in short-term external debt, we would …
19th July 2012
After almost 20 years of negotiations, Russia’s membership in the WTO at last seems imminent. But as the effects of this will be spread over several years, we do not expect a significant impact on the economy in the immediate future. What’s more, in the …
June’s raft of activity data confirmed that strong growth in the first quarter of the year is likely to be the high watermark for the Russian economy in 2012. We think growth slowed to around 4.0% in Q2. What’s more, the economy is on course to slow even …
18th July 2012
At first glance, it looks like the tide is turning towards looser monetary policy in Emerging Europe. But while there may be one or two rate cuts over the coming month, we wouldn’t get carried away. With the exception of Poland, there is little room for …
16th July 2012
Although inflation rose across Emerging Europe last month, our estimates suggest that core price pressures remain weak. As a result, above-target headline inflation should present little barrier to policy easing across the region. … Core inflation still …
13th July 2012
The Central Bank of Russia (CBR) left its benchmark refinancing rate on hold at 8.00% today, citing robust economic performance and that inflation is within the target range. Looking ahead, we think growth will slow sharply in the second half of this …
With the temporary boost to consumer spending from the Euro 2012 Football Championship now over, Ukraine has to get back to reality. Significant external financing needs continue to cast a long shadow over the outlook for Ukraine, making it among the most …
10th July 2012
The draft budget for 2013, 2014 and 2015 submitted last Friday offers some hope to Russia’s ailing public finances by aiming to reduce the budget’s vulnerability to swings in oil prices. Nevertheless, we fear that the measures are likely to be a damp …
9th July 2012
The Romanian parliament’s vote to impeach the President leaves the country clouded by uncertainty and casts doubts on the future of the country’s IMF/EU programme. This is likely to keep the leu and bond yields under pressure – in the short-term at least. …
The passage of Hungary’s new Central Bank Act has lifted the last obstacle to the start of negotiations with the IMF and European Union. But this is merely the beginning. Numerous issues will need to be ironed out before a deal is concluded, and we doubt …
6th July 2012
A combination of slowing inflation and disappointing Q1 GDP data has led to speculation that the Central Bank of Turkey (CBRT) might start to loosen monetary policy. We are sceptical. With the current account deficit still around 9% of GDP, downside risks …
Turkish Q1 GDP data showed that the economy has so far avoided the hard landing that we had feared. What’s more, leading indicators point towards a modest improvement in Q2. Nonetheless, with the current account deficit still large, Turkey remains one of …
2nd July 2012
June’s PMI data provide further evidence that manufacturers in the highly open economies of Central Europe are being hit hard by the crisis in the euro-zone, while those in Russia and Turkey are faring a little better. Even so, in the case of Turkey, a …
We estimate that planned hikes in Russian utility tariffs next month and again in September will add a total of around 2.0%-pts to headline inflation, pushing it to 6.5% by the end of the year. The subsequent impact on real incomes is one of the reasons …
29th June 2012
Czech policymakers have finally responded to the deteriorating growth outlook by cutting interest rates to a record low today. But with little scope for more conventional policy stimulus, we think they may soon resort to unconventional measures – namely …
28th June 2012
The economic and financial effects of a limited break-up of the euro-zone could knock some 2-3% off the level of Emerging Europe’s GDP by the end of 2013. But a bigger, more disorderly, break-up would have much more damaging effects, perhaps knocking 4-5% …
27th June 2012
Signs that the Polish economy is slowing should quell calls for rate hikes over the coming months. But growing troubles in the euro-zone mean that interest rate cuts are likely to come back on to the agenda more quickly than many expect – particularly if …
26th June 2012
This month’s data brought further evidence – if any were needed – that the euro-crisis is casting a long cloud over Emerging Europe. Business surveys have deteriorated further, suggesting that growth has slowed pretty much everywhere. Even in Russia and …
The Turkish MPC shifted slightly towards easing mode at today’s meeting. Nonetheless, with the current account deficit still large and a sharp rise in short-term external debt, we expect monetary policy to remain tight for the foreseeable future. … …
21st June 2012
With attention fixed on every twist and turn in Hungary’s talks with the IMF, it’s easy to forget why the government first raised the prospect of assistance nine months ago. In short, while the fiscal position is not too bad, wider economic frailties and …
Relative to the rest of the region the Russian economy remains in a decent shape, but the first signs of a slowdown are starting to appear. Our estimates suggest that growth eased to around 4.0-4.5% y/y in Q2 from 4.9% y/y in the first quarter. What’s …
The $40bn crisis package that press reports suggest is being prepared by the Russian government should allay fears of a repeat of 2008-09, when the Kremlin was accused of being behind the curve in the face of economic chaos. But at the same time, they …
19th June 2012
Manufacturing PMIs in Central Europe have weakened significantly over the past couple of months as the economic outlook has darkened. The one crumb of comfort, however, is that they have not fallen as far or as fast as the German surveys, which have …
Headline inflation fell pretty much everywhere in Emerging Europe in May on the back of easing food and energy inflation. Moreover, with the possible exception of Turkey, underlying price pressures are also subdued. Notably, core inflation dropped …
13th June 2012
It is probably too soon to judge whether or not Latvia’s internal devaluation has been a success. But the early signs do not suggest that it provides a model for the euro-zone’s crisis-hit periphery to follow. … Is Latvia a model for the euro-zone’s …
The crisis in the euro-zone continues to cast a long shadow over the outlook for Emerging Europe. Most countries are already feeling the effects of weaker export demand, and the very open economies in the region are now in recession. But our view that the …
12th June 2012
Final Q1 GDP data for Central and South Eastern Europe show that the slowdown across the region was driven by weaker domestic demand, with the exception of Slovakia. Meanwhile, exports proved surprisingly resilient – although we doubt that this can last. …
8th June 2012
Compared to 2008-09, Russia is now less vulnerable to financial contagion as a result of a fresh shock to the global economy (most notably from the euro-zone). But at the same time, Russia’s economy has become more dependent on high and rising oil prices. …
7th June 2012
May’s manufacturing PMI data provide further evidence – if any were needed – that the euro-crisis is hitting the economies of Emerging Europe. Industry already appears to be in recession in much of the region and with the latest data suggesting that the …
1st June 2012
First quarter GDP confirmed what we’ve known for a while: Poland is more resilient than her peers to the crisis in the euro-zone, but equally she is not immune. And with the euro-crisis deepening, a mini investment boom about to tail off, and household …
31st May 2012
There are several ways that, in theory, policymakers in Emerging Europe could limit any financial contagion arising from a disorderly break-up of the euro. But in practice, we suspect that building the necessary firewalls will be difficult. … What can …
Policymakers in both Hungary and Turkey kept rates on hold today, but clearly talk of looser policy to support growth is premature. … External financing risks resurface for Hungary and …
29th May 2012
The Euro 2012 Football Championships, which are due to start next month in Ukraine and Poland, are an exception to the general rule that major sporting tournaments do not tend to have a significant impact on economic growth in the host countries. However, …
28th May 2012
Emerging Europe’s financial markets have been battered over the past month amid growing fears of a disorderly Greek exit from the euro-zone. Equities are down by around 10% in most of the region, while local currencies have fallen by as much as 5% against …
24th May 2012
The recent sell-off in the zloty will make it harder for the Polish government to keep public debt from breaching constitutionally mandated ceilings. In the extreme, policymakers face the risk of entering a self-defeating cycle of austerity, even weaker …
The latest slump in the Hungarian forint has taken the currency to below 300/€ – the rate that, on past form at least, has triggered a response from the authorities. This time around, the response will probably come in the form of a renewed government …
23rd May 2012
The raft of activity data released today showed that the Russian economy made a decent start to Q2, with consumers remaining the main engine of growth. Meanwhile, the new cabinet, also announced today, suggests that we are unlikely to see a marked shift …
21st May 2012
The growing risk of Greece leaving the euro-zone has taken a heavy toll on Emerging Europe’s currencies. Most are now back at their lows seen in the autumn of last year. Looking ahead, there is clearly a lot of uncertainty, but a disorderly Greek exit …
18th May 2012
This week’s dismal first quarter GDP data will sharpen the debate over whether policymakers in Emerging Europe should pursue austerity or focus on growth. But in reality, while there is scope for one or two countries in the region to ease back on plans to …
17th May 2012
With a few notable exceptions, Emerging Europe’s direct exposure to Greece is small. But the contagion from a disorderly Greek exit from the euro-zone would have disastrous consequences for the region. … Greek exit risks …
15th May 2012
The raft of Q1 GDP data released today show that output in large parts of Emerging Europe was contracting even before the most recent escalation of the euro-crisis. … Q1 GDP data just the tip of the …
Slovenia’s debt problems are not as severe as those of other Southern European economies, but its public debt is nonetheless on an unsustainable footing. Moreover, given the backdrop of private sector deleveraging at home and recession in key export …
14th May 2012
Today’s balance of payments data from Turkey show that the current account deficit continued to narrow in March. It now looks like the economy is around half way through the rebalancing needed to bring the external deficit down to a sustainable level – …
11th May 2012
The raft of Q1 GDP data due to be released over the coming weeks will confirm that, having been on the brink of a crisis towards the end of last year, most economies in Emerging Europe have since stabilised. Unfortunately, the very latest survey data …
10th May 2012
The post-MPC press conference did not provide much clarity on whether this morning’s surprise hike in Polish interest rates was a one-off event or the start of a new tightening cycle. On balance, we suspect it was the former. In fact, we think there is …
9th May 2012
In his first speech since returning to the Russian presidency, Vladimir Putin underlined the need to shift towards a more liberal economic policy. We have been here before, of course, and we remain sceptical on the likelihood of actual reform. But …
It remains a close call, but we think that the weaker run of data over the past couple of weeks has tipped the balance in favour of Polish interest rates being kept on hold at next week’s MPC meeting. … Balance tips in favour of Polish rates staying on …
4th May 2012
