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Rising virus cases not a major threat to the recovery

New daily coronavirus cases have hit record highs across Central and Eastern Europe over the past month and authorities have responded by tightening restrictions at a local level. Health systems in Poland and the Czech Republic are well placed to deal with a renewed outbreak and restrictions are unlikely to tighten enough to threaten the recovery, but the risks to the outlook are growing in Romania and Croatia.
Liam Peach Emerging Markets Economist
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Emerging Europe Economics Weekly

Corporate FX debt risks in Turkey, EU fund hopes

Recent plans announced by the Turkish authorities to restrict access to lira-denominated loans to corporates with large FX holdings add to the growing risks stemming from corporates' large FX debts. Meanwhile, Poland and Hungary are moving closer to unlocking access to some EU funds but a lack of progress on reforms to the rule of law means that these are likely to be delayed for some time. A resolution to the dispute may give a boost to the beleaguered Hungarian forint, but it will not solve all the problems and macro imbalances that have made it one of the worst performing EM currencies this year.
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.

1 July 2022

Emerging Europe Data Response

Manufacturing PMIs (Jun.)

Manufacturing PMIs for June showed further weakness across the region with the exception of Russia, which seems to have benefitted from a shift from imports toward domestic production. There were some encouraging signs that price pressures and supply disruptions have continued to ease, but we still expect industrial production to weaken sharply in coming months. 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.

1 July 2022

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

More from Liam Peach

Emerging Europe Economics Update

BoI withdraws support, but no sign of tightening

Israel’s strong economic recovery prompted the central bank to phase out one of its emergency support programmes at today’s meeting and Governor Yaron’s comments suggest that the next step towards policy normalisation may involve the end of the bond purchase programme later this year. That said, interest rate hikes remain a distant prospect while inflation remains low.

5 July 2021

Emerging Europe Economics Update

Russian ruble may hold onto some of this year’s gains

The Russian ruble appreciated to a one-year high against the dollar recently but we think the rally will fade as oil prices fall back and US Treasury yields rise further. That said, the central bank’s determination to rein in inflation should keep Russian bond yields high and provide the ruble with more protection in this global environment. We now expect the ruble to end next year at 76/$ (previously 80/$).

In view of wider interest, we are sending this Emerging Europe Economics Update to clients of the FX Markets service as well.

2 July 2021

Emerging Europe Economics Update

Russia: a strong recovery in Q2, but risks ahead

Another strong batch of activity data for May suggest that Russia’s economy may have returned to just shy of its pre-pandemic level in Q2. The foundations are in place for the recovery to continue in Q3, but the latest virus wave and the possibility of a further tightening of containment measures pose a key threat.

1 July 2021
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