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The growth outlook for 2023 across Central and Eastern Europe has brightened a bit over the past month. Wholesale European natural gas prices have continued to fall sharply and survey measures of activity have generally improved. The outlook for external …
26th January 2023
Interest rate cuts still some way off Hungary’s central bank (MNB) left its base rate on hold today, at 13.00%, and we don’t think that it will cut its main policy interest rates until late-2023. In the meantime, we expect that the MNB will continue to …
24th January 2023
Industry resilient, but retail sales hit by high inflation Polish industrial production remained resilient in December but high inflation weighed heavily on real incomes and took its toll on retail sales. On balance, we think that Poland’s economy is …
23rd January 2023
Russia’s current account surplus now shifting fast The focus in media reports on Russia’s record current account surplus in 2022 misses the huge deterioration at the end of the year. We think the balance of payments will be squeezed further, raising the …
20th January 2023
CBRT continues with policy pause Turkey’s central bank (CBRT) left its main policy rate unchanged at 9.00% as expected today and our central view is that rates will remain on hold in the coming months. But with inflation now falling sharply and the …
19th January 2023
Moderating core price pressures, the continued fall in inflation expectations and the sharp decline in wholesale natural gas prices mean we think inflation in Central and Eastern Europe (CEE) will fall a bit more quickly in 2023 than we had anticipated a …
The surge in FDI inflows to a 15-year high in Central and Eastern Europe (CEE) last year will partly unwind this year given the weaker global macro backdrop. But we think that a large part of the increase reflected structural forces, which will keep FDI …
17th January 2023
Further fall in inflation despite utility price hike The softer-than-expected inflation reading in Russia in December, of 11.9% y/y, is likely to be followed by further sharp falls in the coming months towards 4% as last year’s surge in prices passes …
13th January 2023
Early signs that the inflation tide is turning This week brought the clearest evidence yet that the disinflation process in Central Europe is underway as most economies experienced a marked and broad-based easing of price pressures in December. This is …
Europe’s energy crisis, sky-high rates of inflation and Ukraine’s reconstruction were among the biggest topics of conversation at Euromoney’s Central and Eastern European (CEE) forum in Vienna this week. There seems to be a widespread view now that …
12th January 2023
NBR’s slows tightening again, likely the end of the cycle The 25bp interest rate hike by Romania’s central bank today, to 7.00%, probably brings the hiking cycle to an end. Today’s decision was expected by all analysts, including ourselves. The central …
10th January 2023
The narrative surrounding Europe’s energy crisis has completely shifted in recent weeks as warmer-than-normal winter temperatures have reduced heating demand and pushed gas prices down sharply. This will help to improve external positions and lower …
6th January 2023
Deep downturn in Q4, but signs of improvement in December The latest EC Economic Sentiment Indicators for Central and Eastern Europe point to a regional decline in GDP in the order of 0.5% q/q in Q4, but it was encouraging that sentiment increased for the …
Rates on hold, but cuts still some way off Poland’s central bank (NBP) left interest rates unchanged at 6.75% again today. We expect the next move by the NBP will be an interest rate cut , although that is only likely to arrive towards the end of 2023. …
4th January 2023
Energy sanctions starting to take effect in Russia This week brought signs that newly imposed Western sanctions and recent falls in global energy prices are putting renewed pressure on Russia’s economy. It’s still too early to fully assess the impact of …
23rd December 2022
CBRT on hold … for now Turkey’s central bank (CBRT) stuck to its previous guidance today and left its policy rate on hold, at 9.00%, but there is clearly a risk that President Erdogan forces the CBRT to restart its easing cycle, particularly with the 2023 …
22nd December 2022
Rate cuts to arrive in mid-2023 The Czech National Bank (CNB) left its policy rate on hold, at 7.00%, as expected again today and, with inflation set to drop sharply from Q1, we think the CNB will be one of the first EM central banks to cut rates next …
21st December 2022
Resilience to give way to mild recession November’s activity data for Poland were much better than expected and provide further evidence of the economy’s relative resilience to the drags from high inflation and interest rates. Even so, we still expect a …
MNB staying the course as inflation pressures persist Hungary’s central bank (MNB) left its base rate on hold again at 13.00% and is likely to use its communications later today to reaffirm its commitment to its market stabilisation tools to defend the …
20th December 2022
Central banks across Central and Eastern Europe (CEE) have left interest rates on hold over the past month or so but their communications have continued to strike a relatively hawkish tone. Hungary’s central bank has suggested that interest rates may be …
19th December 2022
Hungary strikes last minute deal, but risks remain The EU’s approval of Hungary’s COVID-19 recovery plan this week is a welcome development for Hungary’s economy and financial markets, but it won’t immediately transform the near-term outlook. On Monday, …
16th December 2022
CBR now set for extended pause Russia’s central bank kept its main policy rate unchanged at 7.50% today as it emphasised that inflation risks have become slightly more skewed to the upside. This reinforces our view that the easing cycle is unlikely to …
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest EM Outlook can be found here . EMs will experience one of the broadest slowdowns in GDP growth in 2023 since the 1990s. …
15th December 2022
A widening of Russia’s budget deficit next year to 2.5% of GDP will increase pressure on the government to keep a firm grip on non-military spending. But it should be able to finance the shortfall from its savings and domestic bond issuance. The bigger …
14th December 2022
Economy shows some resilience The large increases in both industrial production and retail sales in Turkey in October provide clear signs that activity is holding up well despite the various domestic and external headwinds. But we doubt this resilience …
13th December 2022
Click here to read the full report. Overview – Emerging European economies are set for recessions this winter as the impact of high inflation, tight financial conditions and weakening external demand take their toll. Our GDP forecasts for 2023 are below …
12th December 2022
Inflation pressures remain soft Russian inflation fell further last month, to 12.0% y/y, and the breakdown provided further signs that demand remains very weak. But this won’t offset the central bank’s concerns about pro-inflation risks and policymakers …
9th December 2022
Hungary’s fuel crisis reaches breaking point Hungary’s government was forced to abandon its cap on petrol and diesel prices earlier this week as fuel shortages intensified across the country. The cap had been introduced at the end of last year and has …
Slowing growth keeps the NBP on hold Poland’s central bank (NBP) stuck to its script today as it left interest rates on hold at 6.75% for the third consecutive meeting. With inflation nearing a peak and the economy slowing, we think the tightening cycle …
7th December 2022
Headline inflation in Central and Eastern Europe (CEE) will peak in most countries in the next few months, at around 20% y/y, and should fall to single-digits across the region by end-2023. But we think this initial large disinflation process will give …
Better surveys, but recessions still lie in store The batch of survey data released this week for November showed improvements in various measures of economic activity across the region. The manufacturing PMIs for Poland and Russia ticked up and the EC’s …
2nd December 2022
There are only a few days to go until the next packages of EU sanctions on Russia targeting its oil trade come into force. There are a few key details still left to be finalised, but it seems to us that disruption to Russia’s oil trade and production is …
Mixed bag, but industrial weakness likely in Q4 The manufacturing PMIs for November were a mixed bag, but suggest that weakening demand and the fading boost from easing supply shortages has begun to take a heavier toll on industrial sectors in Turkey, …
1st December 2022
Economy lacking momentum The October retail sales and industrial production data for Russia tell more of the same story: an economy that has passed the worst of the downturn, but that is desperately struggling for momentum. An outright contraction in Q4 …
30th November 2022
Croatia’s adoption of the euro on 1 st January 2023 is likely to bring only small benefits to the economy given how widely used the euro already is in the country. Even so, we think prospects for Croatia’s economy remain bright and expect it to outperform …
Economy comes off the boil in Q3 Turkey’s resilience since last year’s currency crisis came to an end in Q3 as the economy contracted by 0.1% q/q. Private consumption remained strong, but fixed investment declined and net trade was a large drag. We expect …
Industry across Central and Eastern Europe (CEE) has held up better than might have been expected this year given the extent of the energy price shock. While output in energy-intensive industry has declined by 5-10% this year, that has been more than …
29th November 2022
Sentiment improves, but recessions still likely The EC’s Economic Sentiment Indicators increased in most Central and Eastern European economies in November, but sentiment remains at levels that have been consistent with recessions in most countries in the …
G7 oil price cap losing some of its bite Details about a potential price cap on Russian oil this week of $65-70pb are bringing us to the view that it won’t have much of an immediate impact on Russia. We think the combination of the EU oil embargo and the …
25th November 2022
Inflation appears to have finally peaked for emerging markets – but how quickly will price pressures now ease, and what will that mean for the 2023 outlook? In December's monthly dive into the big stories in EM macro and markets, economists from across …
24th November 2022
Growing domestic and external headwinds have taken a bigger toll on the region’s economies in recent months, with growth slowing sharply in Turkey and Israel in Q3 and GDP contracting outright in Czechia, Hungary and Latvia. Admittedly, there have been …
CBRT final act? Turkey’s central bank (CBRT) delivered another 150bp interest rate cut, to 9.00%, at today’s meeting and suggested that this marked the end of the easing cycle. We’ll take the CBRT for its word but there is clearly a risk that President …
Soft start to Q4 October’s activity data for Poland suggest that the economy lost some steam at the start of Q4 and we think it was probably at the start of recession. We expect that evidence of a deeper downturn taking hold over the coming months will …
23rd November 2022
Here's all our key analysis about 2023's make-or-break elections and their macro and market consequences. … Turkish presidential elections …
21st November 2022
MNB hasn’t won its inflation battle yet Hungary’s central bank (MNB) left its base rate on hold today, at 13.00%, for a second consecutive meeting and reaffirmed that it would continue to use its “market stabilisation” tools to defend the forint. With …
22nd November 2022
The Bank of Israel (BoI) slowed down the pace of tightening today with a 50bp rate hike, to 3.25%, as it emphasised the tightening delivered so far and the early signs that economic activity is slowing. We think it will end its tightening cycle early next …
Voters in Turkey head to the polls in 2023 and if the ruling People’s Alliance and President Erdogan cling on to power, the authorities are likely to double down on their “new economic model”, raising the threat of simultaneous currency, banking and …
Poland’s blast underscores military escalation threat A missile strike that killed two people in Poland on Tuesday raised concern about a further military escalation in the region this week. Central and Eastern European (CEE) financial markets initially …
18th November 2022
Economy stabilising Russia’s economy appeared to stabilise in Q3 as the 4% y/y contraction in GDP reported by Rosstat today is consistent with output rising marginally in seasonally-adjusted q/q terms. That said, there’s little sign in the latest monthly …
16th November 2022
Economy now entering slower growth The slowdown in GDP growth in Israel in Q3, to 2.1% q/q annualised, was in line with expectations as private consumption contracted and net trade exerted a drag. We think Israel’s economy will hold up better than other …
