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Poland’s widening current account deficit is not an immediate cause for concern but, with the quality of financing apparently deteriorating and foreign inflows seemingly being used to finance consumer spending rather than a pick-up in investment, it could …
5th January 2011
2010 has been a year of recovery for Emerging Europe. This process should continue in 2011 but there are at least three important points for investors to bear in mind. First, growth is unlikely to return to the rates seen during the credit-fuelled boom …
21st December 2010
Tonight’s decision by the Central Bank of Turkey (CBRT) to cut its benchmark interest rate by 50bps to 6.5% is a bold step aimed at slowing speculative capital inflows. Ultimately it may have to be reversed, but the fact that policymakers are able to …
16th December 2010
For much of Emerging Europe growth concerns continue to outweigh inflation worries. Accordingly, monetary policy will remain accommodative in most countries next year. The exception to this is Turkey and, perhaps to a lesser extent, Poland. However, even …
14th December 2010
Russia’s accession to the WTO is back in the news and, not for the first time in the past decade, it seems that membership talks might now be concluded at some point within the next twelve months. We have, of course, been here before. But even so the key …
13th December 2010
Annual Turkish GDP growth slowed more sharply than expected in Q3, but the economy appears to have fared better in the fourth quarter and is still set to outperform the region over the coming years. However, today’s data provide further evidence of the …
10th December 2010
The pick-up in Russian inflation over the past couple of months has been driven primarily by a surge in food prices, which should be temporary in nature. Instead, the bigger risk to the inflation outlook remains that the rapid expansion of the monetary …
9th December 2010
Emerging markets as a whole are likely to outperform the developed world by a wide margin over the next couple of years but Emerging Europe is still facing a twin speed recovery. While some economies will impress, others will be held back by the legacy of …
8th December 2010
November’s PMI surveys suggest that industry across much of Emerging Europe is still in very good shape, thanks in large part to the ongoing strength of German manufacturing. Russia, however, remains the exception. … Industry still going …
1st December 2010
The pick-up in Polish GDP growth to 4.2% y/y in Q3 (from 3.5% y/y in Q2) is further evidence that the economic recovery is gathering momentum and is likely to strengthen calls for interest rate hikes in the near term. But while there is a chance that a …
30th November 2010
Emerging markets as a whole are likely to outperform the developed world by a wide margin over the next couple of years, but Emerging Europe is still facing a twin speed recovery. This was borne out in the mixed set of Q3 GDP data that were released …
The outlook for inflation does not offer a particularly convincing justification for this afternoon’s surprise decision to raise Hungarian interest rates. Instead, we think the move is best viewed as a rebuke of recent government policies. This makes …
29th November 2010
The turmoil in the euro-zone’s periphery probably tipped the balance in favour of keeping Polish interest rates unchanged this afternoon and thus delaying a first hike until next month or (more likely) next year. Hawks on the MPC are becoming increasingly …
23rd November 2010
It looks increasingly likely that the Hungarian government will meet, or even outperform, its targets for reducing the budget deficit over the coming years. But with temporary revenue raising measures paying for permanent tax cuts, the underlying fiscal …
Emerging Europe’s medium-term growth prospects have been the subject of much discussion this week. Our view is that the ‘quick wins’ from the current growth model have largely been exhausted but that the region as a whole could grow by 4% a year given the …
19th November 2010
While there are tentative signs that the agricultural sector is recovering from this summer’s drought, the raft of October activity data released this afternoon suggest that the Russian economy made a disappointing start to Q4. … Disappointing start to Q4 …
18th November 2010
The acceleration in headline inflation seen across Emerging Europe in recent months has been driven predominantly by a rise in food prices. This follows droughts in Russia and widespread flooding elsewhere in the region earlier this summer and comes …
17th November 2010
The sharp drop in Russian GDP growth in Q3 stands in stark contrast to the generally strong batch of data released elsewhere in the region earlier this morning and marks Russia out from the rest of the BRICs. … Russia Q3 GDP dragged down by …
12th November 2010
The raft of third-quarter GDP data released this morning generally surprised on the upside. Hungary, Slovakia and the Czech Republic all expanded at a faster pace than expected, while Romania contracted by less than we had anticipated. The key point, …
Data showing that Turkish industrial production fell in September grabbed a few headlines earlier this week. This is perhaps understandable given that manufacturers have so far led the recovery. But the truth is that the rebound in factory output was …
10th November 2010
Emerging market economies will continue to grow rapidly over the next few years. But with current account surpluses in most of Asia and among oil producers likely to remain high, this will not be of much benefit to the developed world. What’s more, while …
8th November 2010
It is now more likely than not that Polish policymakers will start to raise interest rates later this month. But we doubt that this will signal the beginnings of a sustained tightening cycle. … Poland: gearing up to hike interest …
The G20 Summit in Korea next week (11th – 12th) will be overshadowed by the fall-out from “currency wars”, hampering any attempt at the improved coordination of policies necessary to help rebalance the global economy. In particular, the US will find it …
5th November 2010
There is little evidence to back up claims by some policymakers in Poland that interest rates should be raised in order to contain inflation expectations. In fact, doing so could entail some potentially damaging consequences for the real economy. … Should …
The worst of the financial crisis in the Baltic states has clearly passed. But with the region finding it difficult to shift to an export-led growth model, there are legitimate concerns over the strength and sustainability of the economic recoveries seen …
4th November 2010
Manufacturing PMIs strengthened across most of the region in October and continue to point to industrial production growth of between 10-15% y/y over the coming months. But manufacturers in the region will struggle to weather the slowdown in industry that …
2nd November 2010
Concerns that a rapid influx of capital into emerging markets may sow the seeds of the next bubble do not really apply in Eastern Europe. This is because, so far, at least, capital inflows to the region have been fairly moderate compared to the likes of …
29th October 2010
Today’s decision to keep Polish interest rates unchanged and raise reserve requirements instead reflects an attempt to tighten monetary conditions without attracting an influx of foreign capital. Reserve requirements are likely to rise further over the …
27th October 2010
We expect the current account surpluses of most of the world’s ‘super savers’ to fall only gradually over the next few years. Russia, however, is the exception. If oil prices drop back to $60pb over the second half of next year and then stay there, as we …
The outlook for Turkey remains amongst the best in the region, but policymakers at the central bank (CBRT) are still in no mood to raise interest rates. … Central Bank of Turkey turns even more …
26th October 2010
In light of the recent upward revision to our near-term profile for oil prices, we have pushed up our Russian growth and inflation forecasts for 2011. But the economy remains vulnerable to the fall in prices that we expect late next year, and there is …
21st October 2010
The outlook for Poland remains amongst the best in the region, and we now expect the economy to expand by 3% next year (from 2.5% before). But with further steps needed to tackle the large structural fiscal deficit, growth is likely to remain below its …
20th October 2010
Our latest ‘Heat Map’ suggests that pressures facing the region’s banks have continued to ease in recent months. But while the worst of the crisis is now behind us, familiar vulnerabilities persist. At best, this will be a credit-less recovery. More …
19th October 2010
It has been a long time coming, but policymakers in parts of the region are gearing up to begin tightening monetary policy. The Central Bank of Turkey accelerated its so-called ‘exit strategy’ from last year’s stimulus measures earlier this month, while …
18th October 2010
The Hungarian government last night announced a fresh set of fiscal austerity measures, which should allow it to at least come close to meeting next year’s budget deficit target of 3% of GDP. But its efforts remain reliant on temporary measures and a …
14th October 2010
Last month’s pick-up in inflation in the Czech Republic is likely to give further ammunition to the hawks on the National Bank’s (CNB’s) policymaking Board. But core price pressures remain remarkably subdued, and we still think that interest rates could …
11th October 2010
Russian banks have become more willing to lend in recent months. Much still depends on oil prices, but a strengthening banking sector raises the chances that the rapid expansion of the monetary base over the past year feeds into a pick-up in consumer and …
Fears that a rapid influx of capital into emerging markets may sow the seeds of the next bubble are starting to build. For the bulk of Central & Eastern Europe (CEE), however, the biggest risk is that capital inflows over the next couple of years are too …
8th October 2010
The overall state of the public finances in Slovakia is in better shape than in most of Emerging Europe. Even so, a combination of tighter fiscal policy and, more importantly, a fading recovery in Germany, means that GDP growth is set to slow sharply in …
6th October 2010
After recent gains in Slovakia and the Czech Republic, centre-right parties had another strong showing in elections in Hungary and Latvia this weekend. But while Latvia’s ruling coalition has already displayed a strong commitment to fiscal reform, …
4th October 2010
September’s manufacturing PMIs brought further evidence that Poland is leading the recovery in Central Europe. Elsewhere, however, the industrial sector is losing steam. … Poland still leading the …
1st October 2010
Growth in some economies in Emerging Europe, not least Turkey, is starting to look impressive. But underlying inflation pressures remain relatively benign, and concerns over the durability of the global recovery mean that policymakers are in no rush to …
30th September 2010
The Central Bank of Russia (CBR) kept its key interest rates unchanged earlier today and issued a dovish accompanying statement. But in reality official interest rates have little bearing on market rates, and therefore lending and borrowing rates in the …
29th September 2010
The Czech National Bank (CNB) kept interest rates unchanged at 0.75% earlier today, as expected. But the news that one Board member voted for a rate hike will lead to much debate over the future pace of monetary tightening. We remain resolutely dovish. … …
23rd September 2010
Aside from a recent drought-related rise in food prices, our forecast that Russian inflation would fall sharply this year has played out as we expected. But while underlying price pressures should remain modest over the next year or so, it is far too soon …
22nd September 2010
Growth in some economies in the region is starting to look impressive but underlying inflation pressures remain benign and concerns over the durability of the global recovery will keep policymakers from tightening monetary policy quickly. … Still in no …
20th September 2010
Some economies in Emerging Europe should grow at a decent pace over the next year or so, but most are facing a long haul back to health and the likelihood of renewed tensions within the eurozone represents a major risk to the recovery across the entire …
17th September 2010
Today’s slide in the ruble is all the more surprising given that oil prices have been rising over the past few weeks. With oil prices still likely to fall over the next year, we are sticking to our non-consensus view that the Russian currency will weaken …
16th September 2010
After the positive result in Sunday’s referendum on constitutional reform, Turkish markets received a further piece of good news this morning in the form of stronger than expected Q2 GDP data. In response, we have nudged up our growth forecast for this …
14th September 2010
The positive result in yesterday’s referendum on reforms to the Turkish constitution is good news for two reasons. First, it shows that support for the present AKP government is still high and, as such, reduces the likelihood of a fiscal splurge in the …
13th September 2010
