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Russia Activity Data (May)

The latest Russian data for May suggest that activity, having declined sharply after Western sanctions were imposed in March, has started to stabilise. Some sectors of manufacturing have benefited from a shift towards domestic production. On balance, the fall in Russian GDP this quarter looks like it will be in the order of 10% q/q, not the 15% q/q we had previously expected. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.
Liam Peach Emerging Markets Economist
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Emerging Europe Data Response

Israel GDP (Q2 2022)

The stronger-than-expected 6.8% q/q annualised expansion in Israel GDP in Q2 confirms that the Q1 contraction was just a blip. Economic activity remains strong and alongside the red-hot inflation figures for July, the risks are skewed to a 75bp rate hike at next week’s central bank meeting. We think a 50bp hike (to 1.75%) is just about more likely but we maintain our view that rates will reach 3.0% next year. Europe Drop-In (18th Aug.): Winter is coming to the European economy – but how harsh will it get? Join this special briefing on the economic impact of Russia’s gas supply threat. Register now.

16 August 2022

Emerging Europe Data Response

Russia GDP (Q2 2022)

Russian GDP contracted by 4% y/y in Q2, consistent with a fall of 6% in seasonally-adjusted q/q terms – a much better performance than analysts had expected and than had seemed likely a few months ago. There have been signs of stabilisation in many sectors over the past month or two but we don’t expect the downturn to bottom out until Q2 2023 and think the economy will stagnate at best thereafter.

12 August 2022

Emerging Europe Economics Weekly

Hungary’s fiscal tightening, currencies rebound

Hungary's government has reined in the budget deficit much more quickly than had looked likely since April's election, helping to alleviate the large twin deficits. But this presents a major headwind to the economy and supports our view that GDP growth will grind to a halt in the coming quarters. Elsewhere, CEE currencies have received some much-needed respite this month as global risk sentiment has improved. We think this will be short lived but it will at least take some pressure off central banks that are dealing with red hot inflation.

12 August 2022

More from Liam Peach

Emerging Europe Data Response

Economic Sentiment Indicators (Jun.)

The EC’s Economic Sentiment Indicators for Central and Eastern Europe showed broad-based declines in sentiment across the region and across sectors in June to levels not seen in a year. Economic activity has generally held up well since the war in Ukraine started a few months ago, but the second half of this year is likely to be more challenging and we think economic recoveries will slow sharply.

29 June 2022

Emerging Europe Economics Update

Russian sovereign default more symbolic at this stage

Russia’s government has now reportedly defaulted on its foreign-currency denominated debt for the first time since 1918, but this is a largely symbolic event that is unlikely to have an additional macroeconomic impact. Sanctions have already done the damage and locked Russia out of global capital markets.

27 June 2022

Emerging Europe Economics Update

CEE inflation broadening out

Central and Eastern European economies are experiencing their worst bout of inflation since the late-1990s as surging food and energy prices have added to strong core price pressures across a broad range of goods and services. Monetary tightening cycles are likely to continue with interest rates rising to 8% or so over the next few months and we think that rates will remain above neutral for several years. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now  

20 June 2022
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