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Poland: a regional bright spot

The early signs are that activity is recovering quickly in Poland as lockdown measures are lifted. Provided that the virus is contained, we think that Poland will experience the smallest contraction in GDP across Europe this year. Large policy stimulus and Poland’s sectoral make-up mean that the economy is likely to be one of the very few where output is larger by the end of 2022 than it was prior to the crisis.
Liam Peach Emerging Markets Economist
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Emerging Europe Economics Update

The impact of Ukrainian refugees on CEE so far

Ukrainian refugees have boosted labour forces and consumer spending across Central and Eastern Europe (CEE) since the outbreak of the war, but this could prove short-lived if the conflict remains concentrated in Eastern Ukraine and more refugees return home. This Update answers some questions on the impact of refugees in CEE so far, and compares these findings to the analysis we made in an Update in March. 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.

30 June 2022

Emerging Europe Data Response

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.

29 June 2022

Emerging Europe Chart Book

Tightening cycles still have some way to go

Inflation has continued to beat expectations across Emerging Europe over the past month, reaching rates not seen in decades in most countries. It is now weighing more heavily on consumer confidence, and the surprise inflation releases for May prompted central banks to accelerate tightening cycles in a number of economies, including Czechia (125bp hike) and Hungary (185bp). Such large hikes are unlikely to be repeated but, with inflation not set to peak for at least a few more months, tightening cycles still have some way to go. The exceptions are Russia and Turkey. Falling inflation will give Russia’s central bank scope to cut its policy rate further and President Erdogan’s grip on Turkey’s central bank means that rate hikes to combat inflation of more than 70% y/y remain off the cards.

29 June 2022

More from Liam Peach

Emerging Europe Data Response

Israel Consumer Prices (May)

The rise in inflation in Israel to 1.5% y/y in May was partly driven by food and energy, but there are some signs that underlying price pressures have increased. We think that inflation will rise further this year, but we maintain our view that this will be temporary and that interest rates will stay on hold.

15 June 2021

Emerging Europe Economics Update

Russia: consumer spending recovery has further to run

Russian household spending looks set to rebound strongly this year as “excess” savings are drawn down, credit continues to expand, government support boosts incomes, and the labour market recovers. This will keep inflation elevated for a while. But some of these factors are likely to fade next year which should cause spending growth to slow and help to bring inflation back to target.

15 June 2021

Emerging Europe Economics Weekly

Ruble gains, Hungary policy rift, stronger CEE currencies

The Russian ruble appreciated to its strongest level against the dollar since last July this week and the balance of forces now increasingly favours further gains, but a lot depends on geopolitics and all eyes will be on the outcome of the Biden-Putin summit next week. Meanwhile, the difference in opinions between Hungary’s central bank and the government about the outlook for policy further suggests that the central bank is taking the inflation fight more seriously and that the tightening cycle will start this month. Finally, we revised up our forecasts for the koruna, zloty and forint this week.

11 June 2021
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