Central Europe inflation, Sberbank sale, Turkish lira

Inflation rose above the upper level of central banks’ target ranges in Central Europe in January for the first time in over seven years but, while the Czech central bank hiked rates last week, it would take a more sustained rise in inflation to prompt policymakers in Hungary and Poland into action. Elsewhere, developments in Russia this week – including the National Welfare Fund’s planned purchase of the central bank’s stake in Sberbank – reinforced our view that the government is serious about loosening fiscal policy this year. Finally, comments from Turkey’s President Erdogan suggest that interest rates will be cut further, but we think his optimism that looser policy won’t result in a weaker lira or higher inflation is likely to prove misguided.
Liam Peach Emerging Markets Economist
Continue reading

More from Emerging Europe

Emerging Europe Economics Update

More to Polish industry resilience than meets the eye

Poland’s industrial sector as a whole has shaken off widespread materials shortages in recent months, in part due to its more diversified sectoral make-up than the rest of CEE. But it also reflects the fruits of recent investments into new production capacity in key sectors of manufacturing, which we think will continue to help Poland’s economy outperform the rest of CEE in the new few years.

2 December 2021

Emerging Europe Data Response

Russia Activity Data (Oct.)

Russia’s economy made a mixed start to Q4 as industrial production recovered while retail sales growth slowed sharply. With the country’s severe virus outbreak and low vaccine coverage set to keep virus restrictions tight for some time, we think the economy will lose steam in the coming months.

1 December 2021

Emerging Europe Data Response

Manufacturing PMIs (Nov.)

The manufacturing PMIs in November were surprisingly strong across the board, but with supply chains stretched and the emergence of the Omicron variant clouding the outlook, there are reasons to be sceptical that this strength will be sustained in the coming months.

1 December 2021

More from Liam Peach

Emerging Europe Economics Update

CEE: inflation a growing risk as economies re-open

Price pressures in Central Europe are building from a broad range of sources and, while most of these are likely to be temporary, the issue is that countries were experiencing stubbornly high inflation before these pressures emerged. With output gaps set to close more quickly than in other parts of the emerging world by 2023, we think that the risks over the coming years are skewed to a prolonged period of much higher inflation and, subsequently, more aggressive monetary tightening.

2 June 2021

Emerging Europe Economics Update

Poland and Hungary Q1 outperformance to continue

The breakdown of Q1 GDP data showed that strong domestic demand supported expansions in Hungary and Poland, despite severe virus waves, whereas another fall in household spending held back Czechia’s recovery. Growth will gather steam from Q2 onwards, but we think that Poland and Hungary will emerge from the crisis more quickly than Czechia.

1 June 2021

Emerging Europe Data Response

Manufacturing PMIs (May)

The rise in the manufacturing PMIs to fresh record highs for Czechia and Poland in May was driven by output and new orders, but supply issues have continued to push up input and output prices. In contrast, Turkey’s PMI fell to a 12-month low, but should rise this month now that the lockdown has been lifted.

1 June 2021
↑ Back to top