Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
So much for the optimism about Russia’s recovery… Russia’s economy lost a lot of steam at the end of Q3 as the recovery in consumer spending over the summer reversed. (See here .) The rebound was supported by social transfers from the government and the …
23rd October 2020
The decision by Russia’s central bank to leave its policy rate at 4.25% today suggests that inflationary concerns are preventing further easing for now. But the communications reinforce our view that interest rates are likely to be cut next year to 3.50%; …
Overview – Fresh virus outbreaks and tighter containment measures mean that the economies of Emerging Europe are likely to suffer a fresh downturn in Q4, but we still think that the region will bounce back more strongly from the crisis than many other …
22nd October 2020
Turkey’s central bank (CBRT) left its benchmark one-week repo rate unchanged at 10.25% today but adjusted its other policy rates to give it more scope to tighten monetary conditions via the ‘corridor’. Political pressure is clearly making the CBRT …
Strong Q3, but a renewed downturn lies ahead in Q4 September’s batch of Polish activity data confirmed that the economy rebounded strongly in Q3, with GDP growth likely to have increased from -8.2% y/y in Q2 to -2.5% y/y. But this strength came before the …
21st October 2020
A very disappointing end to the third quarter There were few positives in September’s batch of Russian activity data as the contraction in retail sales deepened and the recovery in the manufacturing sector stalled. The rise in virus cases and tightening …
20th October 2020
Headwinds facing Czech economy growing The Czech government this week announced stricter containment measures for the next three weeks in an effort to control the surge in COVID-19 cases which, on a per capita basis, is now the worst globally. Last week, …
16th October 2020
The coronavirus crisis has already dealt a heavy blow to the Ukrainian economy and the risks to the outlook are growing: recent challenges to the independence of the central bank and anti-corruption institutions threaten to undermine the IMF deal agreed …
14th October 2020
Strong recovery set to lose steam Turkey’s industrial production and retail sales data for August add to the evidence that the recovery has remained strong, although the figures appear to have been flattered by a shift in the timing of maintenance …
13th October 2020
The speed and scale of the rise in coronavirus infections across Emerging Europe has prompted a response from the authorities, but policymakers are likely to turn to much broader and tighter restrictions that affect more areas of economic activity. This …
12th October 2020
Activity data show recovery stalled in August… The latest batch of activity data for CEE disappointed in August. Growth in Czech retail sales failed to gain pace and sales slipped back into a year-on-year contraction in Hungary. The level of sales in …
9th October 2020
The conflict between Armenia and Azerbaijan in the disputed region of Nagorno-Karabakh has created yet another schism in Turkey’s relations with the US, the EU and Russia. It may only take a misstep in the conflict to trigger an escalation of geopolitical …
8th October 2020
Rising inflation to prompt pause in monetary easing Russian inflation edged up to 3.7% y/y in September and we think that it will rise a bit further over the coming months, which is likely to prompt the central bank to pause its easing cycle at its …
6th October 2020
The surge in coronavirus cases in Russia looks set to trigger tighter restrictions in the coming months. But we doubt that policymakers will re-introduce a full lockdown. After all, it would be politically infeasible to do so at the same time as they …
Inflation steady but set to rise, prompting more monetary tightening Turkey’s headline inflation rate was unchanged for a third consecutive month at 11.8% y/y in September but we expect it to rise over the coming months. And with the lira still under …
5th October 2020
Geopolitical risks grow for Turkey The conflict in Nagorno-Karabakh has opened up another schism between Turkey, the EU and Russia. An escalation in tensions could trigger sharp falls in the lira and push the central bank into more aggressive monetary …
2nd October 2020
A collapse in foreign firms’ reinvested earnings and a stronger recovery in goods exports than imports have caused Poland’s current account surplus to swell to record levels during the pandemic. While some of these factors are likely to fade, we think …
Pace of the manufacturing rebound slows in September The mixed batch of manufacturing PMIs across Emerging Europe for September suggest that the initial rebound in activity over the summer started to run out of steam at the end of Q3. The recovery is …
1st October 2020
Surge in virus cases yet to weigh on sentiment The further rise in the EC’s Economic Sentiment Indicators for September suggests that the recovery continued this month, albeit at a slower pace. However, we suspect that the recent rise in virus cases …
29th September 2020
Currency concerns prompt interest rate hikes Central banks in Hungary and Turkey unexpectedly raised interest rates this week amid mounting concern about currency falls and inflation. While we think that this will ultimately be reversed in Hungary, …
25th September 2020
The Turkish central bank’s (CBRT’s) decision to hike its policy rates by 200bp today is a response to the recent lira weakness, and should help to restore the Bank’s battered credibility. The move gives the CBRT more room to tighten monetary conditions …
24th September 2020
The speed and size of the rise in new coronavirus cases in parts of Central and Eastern Europe is now starting to challenge our optimism about the strength of the recovery. The Czech Republic, Hungary and Slovakia are experiencing among the worst …
The Turkish lira has continued to weaken in recent weeks and, with the response by policymakers likely to fail to placate investors, we now expect the currency to fall to as low as 9.25/$ by the end of next year. What’s more, the risks lie firmly towards …
23rd September 2020
The decision by Hungary’s central bank to leave its base rate on hold at 0.60% today highlights that the central bank is in a bind due to high inflation and concerns about the forint. Further interest rate cuts are likely to remain off the table and the …
22nd September 2020
Recovery stalls in the middle of Q3 The batch of Polish activity data for August show that the pace of the recovery slowed as pent-up demand following the loosening of lockdown measures eased. The recovery will probably continue over the coming months, …
21st September 2020
Mining sector provides a helping hand The batch of Russian activity data for August show that the economic recovery continued throughout the middle of Q3 as mining output recovered strongly, but activity in the retail and manufacturing sectors lost …
18th September 2020
Drop in lira unlikely to prompt outright rate hikes The Turkish lira has come under additional pressure this week as the risk of EU sanctions has continued to rise. The central bank has tightened monetary conditions further, but an outright hike to policy …
The decision by Russia’s central bank to leave its policy rate on hold at 4.25% today is likely to mark a pause rather than an end to its easing cycle. The central bank will maintain its cautious approach to policy over the coming months as inflation …
The Czech Republic has seen a renewed surge in virus cases in recent weeks and now has one of the worst outbreaks in Europe. While this poses a growing downside risk to the outlook, it has not changed our view that the Czech economic recovery is set to be …
14th September 2020
Activity rebounds strongly at the start of Q3 Turkish industrial production and retail sales posted a strong recovery in July as the continued easing of lockdown measures and rapid credit expansion boosted activity. The tightening of monetary conditions …
Russia’s services sector cushions the fall in Q2 GDP The production breakdown of Russian GDP for Q2 showed that the economy’s sectoral structure helped to cushion the fall in output from the pandemic. Rosstat revised its estimate for the fall in GDP from …
11th September 2020
The rebound in Russian consumer spending since April has been supported by a more active fiscal policy stance than we had expected. Although the pace of growth will soften, spending is likely to remain strong and there’s a growing chance that the economy …
10th September 2020
The Russian ruble looks set to lose further ground over the coming months as geopolitical tensions and the threat of international sanctions ratchet up. We expect the ruble to drift towards 80/$ by year end, before rebounding to 72/$ (previously 65/$) by …
8th September 2020
Inflation rises further, pace of easing cycle will slow Russian inflation rose to 3.6% y/y in August and we think that it will edge up a bit further over the coming months. This shouldn’t trouble the central bank too much, but the threat of sanctions and …
4th September 2020
Ruble vulnerable amid sanctions threat The ratcheting up in geopolitical tensions in Russia this week amid concerns about the use of a chemical nerve agent is a warning sign for the ruble and further falls are likely to lie in store over the coming …
Inflation holds steady, lira key to next move in monetary policy Turkish inflation was unchanged between July and August, at 11.8% y/y, but the lira rather than inflation is likely to determine the central bank’s next moves. If the lira’s recent stability …
3rd September 2020
New daily coronavirus cases have hit record highs across Central and Eastern Europe over the past month and authorities have responded by tightening restrictions at a local level. Health systems in Poland and the Czech Republic are well placed to deal …
2nd September 2020
The 11% q/q drop in GDP in Turkey in Q2 was smaller than we had expected and we now forecast the economy to slump by 3% this year (previously 5.8%). But the recovery over the coming quarters will be held back by weakness in the tourism sector as well as …
1st September 2020
Manufacturing sectors continue to bounce back The batch of manufacturing PMIs across Emerging Europe for August provided further signs that the economic rebound continued in Q3. Industrial sectors are likely to recover further over the coming months, …
Turkish lira still vulnerable as EU tensions escalate The Turkish central bank’s tightening of monetary conditions has helped to stabilise the lira but the further ratcheting up of tensions with the EU mean that the risks to the currency lie to the …
28th August 2020
Sentiment improves further in Q3 The further increase in the EC’s Economic Sentiment Indicators for August echoes the message from other surveys and high-frequency data that the recovery gained pace in Q3. But sentiment remains far below pre-crisis levels …
Political instability in Belarus has prompted speculation about how President Putin will respond to calm the situation. Mr. Putin is working to maintain close ties with Belarus, but the more that the political situation deteriorates, the more likely that …
27th August 2020
The neutral interest rate has become one of the hot topics in Russian monetary policy over the past year and the downward revision to the central bank’s estimate of the neutral rate in July marks the first step in the shift towards a new normal of lower …
26th August 2020
Reasons for caution about Turkey’s gas discovery Turkey’s discovery of gas in the Black Sea will provide some boost to the country’s external position, but it might be quickly eroded. President Erdogan unveiled the discovery on Friday of a field …
21st August 2020
Activity recovering quickly to pre-pandemic levels July’s batch of Polish activity data provides further evidence that industrial production and retail sales have rebounded quickly towards pre-virus levels. The rise in localised virus cases does not yet …
Economy gaining momentum at the start of Q3 The batch of Russian activity data for July suggest that the economy gained a bit of momentum at the start of Q3 following the 8.5% y/y fall in GDP in Q2 as retail sales continued to rebound. But the overall …
20th August 2020
Turkey’s central bank kept its key policy interest rates on hold today and, while the accompanying statement acknowledged growing upside risks to inflation, it looks like that the focus will remain on tightening monetary conditions via the use of the …
The escalation of protests in Belarus and calls for EU sanctions pose a major threat to political stability in the country and the economic outlook, but a downturn in Belarus’ economy would have limited fallout for other countries. The key question is how …
17th August 2020
CBRT does enough, for now Turkey’s central bank has acted swiftly over the past week to tighten monetary conditions and comments from officials suggest that the authorities are shifting away from directly intervening to defend the lira. The lira’s recent …
14th August 2020
A mixed bag across the region with Poland the star performer The Q2 GDP data for Central and Eastern Europe confirmed that the region’s industry-heavy economies suffered the largest hit in the crisis, while Poland and Bulgaria managed to escape …
