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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.
Joseph Marlow Assistant 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 Joseph Marlow

Emerging Europe Economics Update

MNB sends a strong message with monster rate hike

Hungary’s central bank (MNB) stepped up the pace of tightening today with a much larger-than-expected 185bp increase in its base rate, to 7.75%, and the hawkish communications underline the view that further large rate hikes are likely to be delivered over the next few months. We now expect the base rate to rise to 10.50% by the end of this year, compared to our previous forecast of 8.20%.

28 June 2022

Emerging Europe Economics Weekly

Governments collapse, Russia set to default

Governments in Israel and Bulgaria collapsed this week which may delay support to households over the cost of living. The threat to Bulgaria’s economy is probably greater, as political instability also puts EU fund inflows and the ability to secure gas supplies at risk. Elsewhere, a 30-day grace period for Russia’s government to make interest payments on Eurobonds ends on Sunday. While Russia has signalled that it is willing to make the payments in rubles, this would be a breach of the contract and could mark Russia’s first default on foreign currency debt since the Bolshevik revolution.

24 June 2022

Emerging Europe Data Response

Manufacturing PMIs (May)

Manufacturing PMIs for May showed that weaker external demand weighed on export orders in Emerging Europe, and that spillovers from the war in Ukraine hit output. There were some signs of improvement in suppliers’ delivery times and price pressures, but we still think that industrial production is likely to contract in the coming months.

1 June 2022
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