Surging virus cases and the re-imposition of lockdowns

A renewed wave of COVID-19 cases has prompted some governments to reimpose strict containment measures across Emerging Europe and talk of lockdowns is now becoming more widespread. The experience so far during the pandemic is that tighter containment measures need not result in a large hit to activity. But the latest virus waves add to the growing near-term headwinds in the region from rising inflation and supply disruptions to industry and we think that recoveries will slow sharply in Q4.
Liam Peach Emerging Markets Economist
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Emerging Europe Data Response

Turkey Consumer Prices (Nov.)

The rise in Turkey’s headline inflation rate to 21.3% y/y in November will almost certainly be followed by further chunky increases over the coming months that take it to 25-30% as the effects of the recent currency crises continue to filter through. With no sign that President Erdogan will permit an orthodox policy response in the form of large interest rate hikes, the lira will struggle to recoup its losses and inflation will remain at these very high levels throughout much of the next six-to-nine months.

3 December 2021

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

More from Liam Peach

Emerging Europe Economics Update

CBR accelerates its tightening cycle again

Russia’s central bank (CBR) stepped up the pace of its tightening cycle again at today’s meeting with a larger-than-expected 75bp interest rate hike, to 7.50%, and the hawkish tone of the accompanying communications suggest that further tightening will be needed. We think the policy rate will be hiked to 8.25% by year-end and remain higher than most expect throughout 2022.

22 October 2021

Emerging Europe Economics Update

CBRT now playing with fire after aggressive rate cut

Any remaining confidence in the credibility of Turkey’s central bank (CBRT) was shattered after today’s larger-than-expected 200bp interest rate cut, to 16.00%. The lira hit a fresh record low against the dollar and we think that it will continue to weaken as President Erdogan piles on the pressure for further easing. The risk of another balance of payments crisis akin to that in 2018 will continue to grow.

21 October 2021

Emerging Europe Data Response

Poland Activity Data (Sep.)

The latest activity data suggest that Poland’s economy ended Q3 with solid momentum, and GDP is likely to have risen by 1.6% q/q (4.7% y/y) in Q3 as a whole. But with the re-opening boost fading and supply issues likely to take a bigger toll on industry, we think that growth will slow further in Q4.

21 October 2021
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