Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
A number of events over the course of this week have thrown Russia’s reform agenda and the 2012 presidential elections back into the spotlight. It’s still far too early to conclude whether Mr. Putin or Mr. Medvedev will prevail in 2012. But while the …
10th September 2010
The past week has brought further evidence that Hungary’s government is starting to pay the price for its bellicose talk. Bond yields are rising and the forint has failed to rally in recent weeks, despite an improvement in global risk appetite. While it …
9th September 2010
This report is only available as a PDF. Click to download. … Central Europe: the fiscal squeeze is here …
8th September 2010
July’s slump in Czech retail sales was not a huge surprise, given that June’s surge was built on flimsy foundations. By contrast, the slowdown in industrial production growth, while exacerbated by calendar effects, is more of a concern and contradicts …
6th September 2010
Yesterday’s cabinet reshuffle in Romania does not present any immediate risk to the IMF-led loan programme. But it underlines the tense political situation and the deep divisions in parliament over the government’s austerity measures. In any case, the …
3rd September 2010
The Bulgarian economy has been slower to recover than many of its peers in Emerging Europe, and it is unlikely to surge ahead anytime soon. We still think that GDP is on course to contract again this year, and that the overall pace of recovery will be …
2nd September 2010
The manufacturing PMIs remained consistent with rising industrial production in every country last month. But there were signs of mixed fortunes, and given the slowdown expected in key export markets, we expect manufacturers in Emerging Europe to come …
1st September 2010
Data released yesterday show that the Polish economy grew by a stronger than expected 3.5% y/y in Q2 (up from 3.0% y/y in Q1). We have since raised our GDP forecast to 3% this year, from 2.5% previously. But with further fiscal austerity measures likely …
31st August 2010
The Turkish bond market has shrugged off the news that a much vaunted fiscal rule will not now be implemented until 2012 at the earliest. This may be justified since, on its own, a rules based framework provides no guarantee of budget responsibility. But …
26th August 2010
Most economies in Emerging Europe posted positive quarterly growth in Q2 and some countries, notably Russia and Turkey, remain on track for an impressive rebound this year. However, a number of factors suggest that Q2 will mark the high point for growth …
25th August 2010
The surge in Czech retail sales over the past couple of months is not as good as it seems at first sight. In particular, the rapid rise in sales volumes appears to owe much to heavy discounting by vehicle sellers. … More to the surge in Czech retail sales …
24th August 2010
Emerging Europe Central Bank Watch 1 Aug. 2010 EMERGING EUROPE CENTRAL BANK WATCH Economies in Emerging Europe are more vulnerable than those in the West to a spike in wheat prices following recent events in Russia. After all, food accounts for a much …
20th August 2010
July’s ‘Economic & Social Indicators Report’, released earlier this afternoon, contains the first signs that this summer’s droughts and associated wildfires have begun to hit activity in some sectors of the Russian economy. But for now at least, there is …
18th August 2010
History suggests that the economies of Central Europe (Hungary, Poland and the Czech Republic; the CE3) have in the past had to grow by between 3.0%-3.5% in order to create jobs. But the region’s economies are unlikely to expand at this pace for at least …
The raft of preliminary Q2 GDP releases from Emerging Europe this morning paint a broadly positive picture. But given the significant headwinds still facing the recovery, this may be as good as it gets. … The recovery gains pace, but is still likely to …
13th August 2010
In light of stronger than expected Q2 GDP data from the Baltic States over the past few weeks, we have raised our GDP growth forecasts for this year and next. But with domestic demand set to remain under intense pressure, the region still faces a long …
12th August 2010
The Russian economy expanded by a solid 5.2% y/y in Q2 (up from 2.9% y/y in Q1). But given the impact of the current drought and, more notably, our view that oil prices will fall back later this year and stay there, we suspect that this will mark the …
11th August 2010
Turkey’s current account deficit was smaller than expected in June, but it widened as a share of GDP over Q2 as a whole. What’s more, while the quantity of financing does not appear to be a concern at present, the quality of financing has deteriorated in …
The Czech National Bank (CNB) today kept interest rates on hold at 0.75% for the second consecutive meeting. We are sticking to our view that rates will remain at record lows until 2012. … Czech Rep: rate hikes remain a distant …
5th August 2010
Turkey’s medium-term growth prospects are just about the best in Emerging Europe. But realising the economy’s full potential will require raising domestic savings. If the authorities can achieve this then GDP could grow by 7% per annum over the next 25 …
4th August 2010
Concerns that the current drought in Russia will trigger a surge in food prices and a wider pick-up in inflation are increasing. However, a number of factors suggest that a repeat of the food-driven surge in inflation seen in late-2007 and early-2008 is …
3rd August 2010
Manufacturing PMIs fell in every country with the exception of Russia last month, but remain consistent with double-digit annual increases in industrial production. The key question is whether this pace of expansion can be sustained against a backdrop of …
2nd August 2010
With the notable exception of Hungary, most countries in Emerging Europe have now started to step up efforts at fiscal consolidation. In particular, the new governments in Slovakia and the Czech Republic both came to power advocating austerity measures, …
30th July 2010
Details of Russia’s plans to raise up to $30bn through the sale of state assets have trickled out over the past day or so. The proposals are good news at the margin, although the renewed emphasis on privatisation primarily reflects the need to reduce …
29th July 2010
Turkey’s Q3 Inflation Report confirms that policymakers remain resolutely dovish and relaxed about the inflation outlook. We now think that interest rates will stay on hold until 2011. Furthermore, even when rates do start to rise, the pace of tightening …
27th July 2010
In stark contrast to recent developments in Hungary, the fiscal cutbacks announced by the Romanian government have so far helped to keep its IMF-led loan deal alive. But these will come at a cost. We now expect the economy to contract by 2.5% this year, …
26th July 2010
The recovery in manufacturing across Emerging Europe has for the most part been pretty impressive. With the notable exceptions of Romania and Bulgaria, industrial output is now growing at doubledigit annual rates in nearly every country. But while there …
Hungary can probably survive without a new IMF/EU programme for the remainder of this year. But we suspect it will eventually be forced to re-engage with the Fund either later this year or early in 2011 – and on much stricter terms. In the meantime, …
23rd July 2010
Recent data suggest that the economy is back on track for a robust rebound this year. Nonetheless, we suspect that Q2 will mark the high point for annual GDP growth and the pace of recovery is likely to fade in the second half of the year and into 2011. … …
20th July 2010
This weekend’s breakdown in talks between the Hungarian government and the IMF rounds off a dire start for the new Fidesz government. While Hungary can get by without IMF funds for now, Hungarian financial markets look set for an extremely rough ride over …
19th July 2010
Most countries in the region are on the road to recovery, but the large amount of spare capacity created by last year’s recession means that on the whole the outlook for inflation remains extremely benign. While inflation did edge up in Hungary and Poland …
16th July 2010
The Turkish economy is currently undergoing a rapid rebound, and its near-term outlook is the brightest in Emerging Europe. We expect GDP to grow by 6.5% this year, and while the recovery is likely to lose some steam over the next six to twelve months, we …
15th July 2010
Today’s announcement that Ukraine will raise consumer gas prices by as much as 50% from 1st August suggests that the government is serious about the reforms needed to keep the country’s IMF programme on track. But while this is clearly a positive …
14th July 2010
The economies of Central Europe may be on the road to recovery but the large amounts of spare capacity created by last year’s recession means that the outlook for inflation remains extremely benign. Inflation edged up in Hungary and Poland last month, but …
13th July 2010
Despite repeated warnings from Russia’s inflation hawks, price pressures in Emerging Europe’s largest economy have continued to abate. We expect disinflationary forces to dominate for a while, although a more flexible exchange rate remains the key to …
8th July 2010
Today’s news that Hungarian industrial production grew by a massive 5.4% m/m in May could be another sign that a weaker euro is actually helping manufacturers in Central and Eastern Europe (CEE). But even if it is, and despite the fact that we expect the …
7th July 2010
The financial markets’ luke warm endorsement of Ukraine’s new IMF deal is probably justified. While a new IMF programme is good news in theory, in practice its success will depend on whether or not it can act as a spur for much-needed, but deeply …
5th July 2010
The latest manufacturing PMIs from across Emerging Europe suggest that the impressive rebound seen in the industrial sector will continue over the coming months. However, with domestic demand still subdued, the current industry-led recovery in the region …
1st July 2010
A sharp sell-off over the past few days has capped a tough first half of the year for the region’s equity markets. The good news is that valuations now look cheap, pointing to a period of outperformance once appetite for riskier assets starts to recover. …
Q1 2010 GDP data from Turkey reaffirm our view that it will be the best performing economy in the region over the next year or so. However, while the pace of recovery should continue to impress in the near term, familiar vulnerabilities are starting to …
30th June 2010
This morning’s ruling by the Romanian Constitutional Court against planned cuts to state pensions deals a blow to the government’s austerity programme. While much remains uncertain, it seems unlikely that the IMF board, which is due to meet early next …
25th June 2010
If the recent experience of the Baltic States offers any lessons for policymakers in the West it is that aggressive fiscal consolidation at a time when the private sector is also retrenching is likely to lead to much weaker levels of activity and a surge …
23rd June 2010
There are increasing signs that Hungarian policymakers have reached the end of the monetary easing cycle. But with the economy facing a tough time over the coming years, inflation pressures will be extremely weak and interest rate hikes remain a distant …
21st June 2010
Marek Belka was recently sworn in as the new President of the National Bank of Poland, and his impressive credentials as a former head of the IMF’s European Department make him a safe pair of hands who will play well with the markets. However, the bigger …
18th June 2010
In a speech to the St. Petersburg International Economic Forum this morning, President Medvedev unveiled a series of market-friendly reforms including changes to the capital gains tax regime and a relaxation of restrictions on foreign investment. But …
Our latest ‘Heat Map’ suggests that pressures on the region’s banks have eased in recent months. Capital levels have been rebuilt and loan to deposit ratios are falling. But familiar vulnerabilities remain, particularly in the Baltics, Balkans and …
16th June 2010
Problems in the euro-zone’s periphery will exacerbate the twin-speed recovery already underway in Emerging Europe. No country would escape unscathed from a full-blown crisis in Western Europe, but strong financial linkages mean that Bulgaria and Romania …
The Romanian government looks set to scrape through tomorrow’s no-confidence vote, thus averting a fresh political crisis and keeping relations with the IMF on track for now. But with the vote effectively paving the way for a significant fiscal squeeze, …
14th June 2010
The recent surge in the Swiss franc has rekindled fears over the health of Eastern Europe’s banking sector. As it happens, the bulk of foreign currency lending in the region has taken place in euros. The exception is Hungary, where a stronger Swiss franc …
11th June 2010
The announcement of a renewed fiscal squeeze in Hungary should help to ease market fears of a ‘Greek style’ crisis in the country. But the policies unveiled earlier today sidestep the underlying need to tackle the bloated public sector in favour of …
8th June 2010
