Slashing our forecasts across the region

Countries across Emerging Europe have stepped up their efforts to contain the coronavirus outbreak over the past week or so and the economic damage will now be much more severe than we had previously thought. Output will decline sharply in Q2 and, even if the outbreak is brought under control soon, all economies in the region look set to contract over this year as a whole.
Jason Tuvey Senior Emerging Markets Economist
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Emerging Europe Economics Weekly

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.

22 October 2021

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

More from Jason Tuvey

Emerging Europe Economics Weekly

Lira touches new low, CEE bond yield divergence

It's been a rocky week for the Turkish lira amid more changes at the central bank and political upheaval regarding a possible link between politicians and organised crime. This, coming alongside high inflation, has reduced the chances of an interest rate cut at the next meeting in June. Meanwhile, local currency bond yields have diverged in Central Europe recently, but we don't think this will continue and see scope for further rises in yields over the coming years, particularly in Czechia.

28 May 2021

Africa Economics Update

Nigeria’s recovery to remain stuck in first gear

The pick-up in Nigeria’s GDP growth in Q1 was driven in large part by the oil sector and rising oil output will support a further acceleration in growth over the coming quarters. But FX restrictions, limited fiscal support and a very slow vaccine rollout mean that the recovery is likely to remain stuck in the slow lane.

24 May 2021

Africa Data Response

South Africa Consumer Prices (Apr.)

The jump in South Africa’s headline inflation in April, to 4.4% y/y, was driven by energy price effects but there were signs that broader price pressures are starting to build. But even so, we think that the Reserve Bank will keep rates on hold for longer than investors currently expect in order to support the economy.

19 May 2021
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