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The Israeli air strikes on Iran overnight have renewed fears of a widening of conflict in the Middle East. We covered the implications for the oil market and the global economy in a report here , and discussed the latest developments in a Drop-in …
13th June 2025
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
The European Commission gave its approval for Bulgaria join the euro-zone this week, which clears the way for the country to adopt the euro on 1 st January 2026. Bulgaria’s accession had been delayed over the past couple of years in large part due to …
6th June 2025
CBR delivers dovish surprise as overheating pressures ease The decision by the Central Bank of Russia (CBR) to cut its policy rate by 100bp today, to 20.00%, came as a dovish surprise, and we now think the policy rate will now end this year at 17.00% …
Rates left on hold, but easing cycle to resume before long The National Bank of Poland (NBP) left its policy rate on hold today, at 5.25%, but this is only likely to mark a short pause in the easing cycle. We think that interest rates will be cut again at …
4th June 2025
Downside inflation surprise re-opens the door to monetary easing The larger-than-expected fall in Turkish inflation in May, to 35.4%, will increase the CBRT’s confidence that it can restart its easing cycle soon. While we had thought the easing cycle …
3rd June 2025
Tariffs may be beginning to take their toll on CEE industry The fall in the manufacturing PMIs out of Central and Eastern Europe (CEE) last month suggest that US tariffs may be holding back the region’s industrial sectors. Elsewhere, inflation pressures …
2nd June 2025
Opposition victory will continue to block government reform drive The victory for Karol Nawrocki, the candidate of the nationalist opposition party (PiS), in Poland’s presidential election will continue to stymie the government’s efforts to push through …
The polls ahead of the second-round run off of Poland’s presidential election on Sunday point to a very tight race, with the two remaining candidates sharing virtually equal levels of support. The president of Poland has little direct input into domestic …
30th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
Encouraging signs for the rebalancing process The slowdown in Turkish GDP growth, to 1.0% q/q, in Q1 and, more importantly, the fact that net trade is propping up growth provide positive signs that policymakers’ efforts to rebalance the economy and bring …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
Easing cycle to remain on pause, but tariff risks grow larger The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think it is likely that above-target inflation will prevent interest rate cuts being delivered this …
27th May 2025
Regional growth resilient (for now) despite tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that pockets of the region are starting to feel the bite from US tariffs, but that overall regional …
Russia’s invasion of Ukraine caused grain prices to surge to record levels in 2022, but a peace deal won’t lead to large falls in prices. This is mainly because Ukrainian grain production has already largely recovered from the war-related disruption. …
BoI leaves rates on hold, timeline for easing slipping back The Bank of Israel (BoI) left its policy rate unchanged as expected at 4.50% again today, but the accompanying communications took a slightly more hawkish tone on inflation. We think the easing …
26th May 2025
Assessing the fallout after a busy election weekend Last Sunday was a busy day of voting in CEE and threw out some surprises. Pro-EU centrist Nicusor Dan won the second round of Romania’s presidential election, even though he’d lagged in the polls. …
23rd May 2025
US-EU brinkmanship highlights risks President Trump’s threat of a 50% tariff from 1 st June may well turn out to be a negotiating tactic and seems very unlikely to be where tariffs settle over the long run. But if it were implemented it could result in a …
Our View: The economies of Central and Eastern Europe have lost momentum over the course of 2025 and, while the region is relatively insulated from US tariffs, the risks to our growth forecasts have generally shifted lower this month. Some central banks …
22nd May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. The push to enlarge the EU has gained momentum since the start …
20th May 2025
The unexpected victory for centrist candidate, Nicusor Dan, in the second round of Romania’s presidential election on Sunday marks a major comeback against the far-right, and will ease concerns about the country veering from its pro-EU stance. That said, …
19th May 2025
Sharp contraction at the start of the year The sharp slowdown in Russian GDP growth from 4.5% y/y in Q4 to 1.4% in Q1 is consistent with a sharp fall in output and suggests that the economy may be heading for a much harder landing than we had expected. …
16th May 2025
Risks now skewed towards hikes rather than further cuts The National Bank of Romania (NBR) highlighted concerns with the uncertain political backdrop and recent pressure on the currency when leaving its policy rate on hold today, at 6.50%. We now think …
The polls ahead of presidential elections in Romania and Poland this Sunday point to diverging political paths for the two largest economies in Central and Eastern Europe over the coming years. We’ll be discussing the implications of Sunday’s election …
Growth slows across CEE ... but Poland beats expectations The Q1 GDP data released in Central and Eastern Europe (CEE) today confirmed that growth slowed across the region ahead of the introduction of US tariffs. That said, Poland’s relatively strong …
15th May 2025
The strong lead for far-right candidate George Simion in Romania’s presidential election, and the collapse of the coalition government last week, led to the largest one-week fall in the leu since 2009. We estimate that the exchange rate is still …
14th May 2025
The recent climbdown has left the effective US tariff rate on the rest of the world at around 15% as opposed to the 27% which was threatened at the height of this year’s trade war. While this is still the highest since the 1930s, it is unlikely to cause a …
13th May 2025
Donald Trump has arrived in the Middle East and changes in the power and influence of the region’s actors mean that he will find a very different region to the one during his last visit in 2017. Iran and Russia (and, indirectly, China) are nursing blows …
Global Trade Stress Monitor …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
12th May 2025
The strong showing for far-right nationalist, George Simion, in the first round of Romania’s Presidential election on Sunday has deepened the country’s political crisis, and the fallout in Romania’s financial markets could get more messy in the coming …
9th May 2025
NBP cuts by 50bp ... but easing cycle may be more limited than most expect The decision by the National Bank of Poland (NBP) to cut its policy rate by 50bp today, to 5.25%, rather than opt for a smaller 25bp cut, suggests a slightly more dovish balance on …
7th May 2025
CNB cuts by 25bp, but easing cycle may now be over The Czech National Bank (CNB) cut its policy rate by 25bp today, to 3.50%, but we think that this may mark the end of its easing cycle. Our forecast for the policy rate to remain on hold at 3.50% over the …
Simion’s lead leaves Romania on the verge of a big political shift Far-right candidate George Simion emerged as the clear frontrunner in the first round of Romania’s rescheduled presidential election and is now the favourite to win the second round on 18 …
5th May 2025
Russia’s economy may be starting to break ... The latest economic data released out of Russia have given clear signals that growth has slowed sharply, with GDP having potentially contracted outright in q/q terms in Q1. We had expected a slowdown to …
2nd May 2025
PMIs not as good as they look The manufacturing PMIs across Central and Eastern Europe (CEE) held up relatively well in the face of higher US tariffs, but forward looking components of the surveys suggest conditions may deteriorate ahead. Meanwhile, price …
This Update answers some key questions on the recently agreed US-Ukraine minerals deal. In short, estimates of Ukraine’s mineral wealth seem to be overblown. The deal may provide more US support for Ukraine in peace talks, but Russia and Ukraine remain …
1st May 2025
This Rapid Response has been amended from our original response to correct the food CPI figure. Fall in inflation paves the way for May rate cut The larger-than-expected fall in Polish inflation, to 4.2% y/y, in April, is probably enough to tip the …
30th April 2025
Hungary contracts ahead of tariff impact The Q1 GDP data released out of Hungary and Czechia showed that momentum in both economies slowed at the start of this year, with Hungary suffering a renewed contraction. The risks to our below consensus full-year …
This Update answers five key questions on Romania’s rescheduled presidential election, the first round of which takes place on Sunday 4 th May. A victory for far-right frontrunner George Simion would likely raise concerns about the country veering away …
29th April 2025
MNB to stay on hold as above-target inflation persists The Hungarian central bank (MNB) left its base rate on hold today, at 6.50%, and despite downside risks to activity from US tariffs, we think its easing cycle will remain on pause throughout 2025. …
Sentiment holds up well in the face of Trump’s tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) provide a tentative sign that the impact of US tariffs on the region has been fairly contained so far. The …
The US steps up its peace deal efforts The US has been pushing harder over the past week to achieve a peace deal that Russia is willing to accept. But the more concessions that are offered to Putin, the less willing Ukraine is likely to be on board with a …
25th April 2025
CBR drops tightening bias, rate cuts likely in Q3 The Central Bank of Russia (CBR) left its policy rate on hold at 21.00% again today and dropped the language in its statement that further interest rate hikes are possible. With inflation nearing a peak, …
Our View: The economies of Central and Eastern Europe are generally less exposed to higher US tariffs than other EM regions, but we have still become more concerned about the hit to growth this year from US trade protectionism. Alongside signs that wage …
24th April 2025
Odds of a May rate cut shorten The weaker-than-expected Polish industrial production and wage data for March have increased the probability that the central bank (NBP) will restart its easing cycle at its next meeting in May, but that decision will still …
22nd April 2025
CBRT hikes rates amid significant capital outflows Turkey’s central bank (CBRT) delivered a hawkish surprise in raising its one-week repo rate to 46.00% today. While this won't tighten monetary conditions, it does formalise the tightening delivered …
17th April 2025
CBRT signals tight policy here to stay The decision by the Turkish central bank (CBRT) to hike its one-week repo rate by 350bp, to 46.00%, formalises the emergency monetary tightening delivered last month and is a strong signal of commitment to a tight …
Pause on reciprocal tariffs reduces risks for CEE President Trump’s 90-day pause on “reciprocal” tariffs has reduced the scale of downside risks to the global economy, and our new working assumption is that US tariffs on most economies stay at the 10% …
11th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
10th April 2025
