Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Economy shrugs off coronavirus outbreak in Q1 The relatively strong batch of Russian activity data for March suggest that GDP growth probably picked up a touch to 2.5% y/y in Q1. However, this largely reflects the fact that Russia was much slower to …
27th April 2020
Turkey turns to import compression to protect lira Turkish policymakers’ efforts to prevent the lira from slipping through 7/$ will prove futile and, with the chances of an IMF deal slim, the government has turned to import compression to counter balance …
24th April 2020
The Russian central bank abandoned its cautious approach to the coronavirus outbreak by cutting its key policy rate by 50bp, to 5.50%, today and the accompanying communications gave the clearest possible indication that further easing is on the cards. …
Overview – Emerging Europe will experience its largest decline in real GDP this year since the collapse of the Soviet Union. The aggressive policy response across Central Europe and the ability of the authorities there to bring the virus under control …
23rd April 2020
The plunge in oil prices won’t push Russia’s economy into a financial crisis, as it did in 2008/09 and 2015. But the government is likely to run its largest budget deficit since the late 1990s, which will limit the size of the fiscal package to support …
22nd April 2020
The Turkish central bank responded to signs of a clear downturn in the economy by cutting interest rates by a further 100bp today but, with downward pressure on the lira continuing to mount, we think that the scope for further monetary easing is limited. …
Economy heading for a collapse in output The collapse in the Polish activity data for March came on the back of two strong months and suggests that the economy probably avoided a contraction in Q1 and grew at around 2.0% y/y. But the slump in March is a …
Pressure builds on Turkish lira The Turkish lira was resilient in March’s market sell-off but it’s been the ugly duckling of EM currencies this month as fears grow over the country’s coronavirus outbreak and poor external position. Whereas most EM …
17th April 2020
The damage to Turkey’s economy from the coronavirus outbreak has led to suggestions that the government may turn to the IMF for a financing package, but the political backdrop means that this would almost certainly be a last resort. Policymakers would …
15th April 2020
Coronavirus developments: the good and the bad Governments in parts of the region have had some success in slowing the spread of the virus, but there is clear evidence that Russia and Turkey are struggling to contain outbreaks. In Turkey, cases topped …
9th April 2020
Economies across Emerging Europe are heading for a sharp contraction in output, but one crumb of comfort is that vulnerabilities are drastically lower than they were in the run-up to the Global Financial Crisis. Large balance sheets strains are unlikely …
Inflation set to rise gradually, but easing is on the cards The rise in Russian inflation to 2.5% y/y in March probably marks the start of a gradual pick-up over the next few months as the effects of the weaker ruble feed through to consumer prices. But …
6th April 2020
Hungary’s Orbán granted unlimited power The Hungarian parliament’s decision to allow Prime Minister Viktor Orbán to rule by decree indefinitely has caused uproar among EU officials. Governments globally have assumed emergency powers to fight the …
3rd April 2020
Drop in inflation opens door for more rate cuts The drop in Turkish inflation in March, coupled with the sharp downturn in the economy, means that the central bank is likely to follow up last month’s emergency 100bp interest rate cut with further easing. …
Turkey’s banks muddled through the currency crisis two years ago, but they are now in a weaker position to confront the economic and financial market fallout from the coronavirus outbreak. At the very least, the recent sharp tightening of external …
2nd April 2020
The slump in output has only just begun The slump in March’s manufacturing PMIs across Central Europe to levels not seen since the financial crisis are a sign of things to come and the figures for April are likely to be a lot worse. Russia’s PMI held up …
1st April 2020
The coronavirus has spread across Emerging Europe faster than any other region in the emerging world and governments have implemented increasingly restrictive measures to contain its spread. These measures, combined with the effects of social distancing …
31st March 2020
Downturn has only just begun The widespread slump in March’s Economic Sentiment Indicators (ESIs) for Central and Eastern Europe suggest that regional GDP growth slowed from 3.2% y/y in Q4 to around 2% y/y in Q1. But, with the survey not adequately …
30th March 2020
CEE central banks expand their toolkit As the number of coronavirus cases has increased and the damage to the region’s economies has intensified, the policy response across Central and Eastern Europe (CEE) has become more aggressive. Central banks in …
27th March 2020
The Czech central bank followed up last week’s emergency interest rate cut with further easing today and opened the door to use other measures to support the economy and stabilise the financial system. With the economic damage from the coronavirus …
26th March 2020
Hungary’s central bank announced a range of measures to increase liquidity in the banking system at today’s MPC meeting. But the economic effects of the coronavirus are likely to be much more damaging than policymakers currently think, suggesting that …
24th March 2020
The slump in domestic and external demand as a result of the coronavirus outbreak means that we now expect the Russian economy to contract sharply this year. Despite its recent reluctance we expect the central bank to cut interest rates before long and …
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 …
23rd March 2020
Outlook goes from bad to worse The downside risks to the global economy have now become reality and the effects of the coronavirus will cause output to fall sharply in Q2 and GDP across the region will contract this year. The number of coronavirus cases …
20th March 2020
The Russian central bank’s decision to keep the policy rate unchanged at 6.00% today made it one of the few major central banks that has yet to cut rates to support the economy in response to the coronavirus. The central bank announced a series of …
The Turkish lira has held up relatively well amid the coronavirus-related sell-off in EM currencies, but the country’s large external debts leave it vulnerable if external financing conditions continue to tighten. A sharper sell-off in the currency would …
19th March 2020
The coronavirus outbreak has prompted interest rate cuts and fiscal support packages in several countries across Emerging Europe and we think that more easing lies in store. That said, Turkey’s easing cycle could grind to a halt and the sharp fall in the …
18th March 2020
The restrictive measures implemented by the authorities across Central and Eastern Europe to stem the spread of the coronavirus, as well as the spillover effects from the downturn elsewhere, will result in a sharp fall in regional GDP in Q2, of perhaps as …
Russia: oil collapse a headwind, but not disaster The outlook for Emerging Europe has taken a considerable turn for the worse over the past week. On the face of it at least, developments seem most adverse for Russia. The shift in oil policy in Saudi …
13th March 2020
The collapse in oil prices will reduce current high rates of inflation in Central Europe and provide some respite for those oil importers with more fragile external positions (Turkey, Romania and Ukraine). However, it will do little to cushion the blow to …
12th March 2020
The recent fall in the ruble will help to cushion the hit to the Russian government’s revenues resulting from the plunge in oil prices, but it will come at a cost to corporates that have large external debt burdens. The ruble slumped by 8% against the …
10th March 2020
The tailspin in global oil prices will push Russia’s current account and budget balances into deficit but shouldn’t create severe strains in the economy. It would probably take a steeper fall in prices, to $25pb or lower, to put a brake on plans to raise …
9th March 2020
Policy support to be stepped up as virus spreads The coronavirus outbreak has prompted a policy response across much of the world, but policymakers in Emerging Europe have only gone as far as acknowledging the risks. We suspect that support will be …
6th March 2020
Falling inflation will prompt another rate cut The further fall in Russian inflation to 2.3% y/y in February leaves the door open for the central bank to continue its easing cycle this month. Although market expectations for easing have been pared back …
With the coronavirus outbreak spreading across Europe and its disruption to economic activity likely to mount, we think that the Polish central bank will ease policy this year. But the tone of the MPC’s post-meeting press conference today suggests that …
4th March 2020
The spread of coronavirus outside China and its possible economic effects has prompted us to revise down our GDP growth forecasts across the region by 0.2-0.5%-pts. The scope for monetary easing is limited, but we think that central banks in Poland and …
Inflation rises again, but rate cuts still in play (for now) The further increase in Turkish inflation in February probably won’t be enough to deter the central bank from easing monetary policy a little more in the next couple of months. But policymakers …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Turkey’s recovery gathering pace, divergence across Central Europe The rise in Turkey’s manufacturing PMI to a two-year high in February provides further evidence that the economic recovery continued at a rapid pace at the start of 2020. Elsewhere, there …
Syria tensions hit Russian & Turkish markets Concerns about the coronavirus outbreak have hit global financial markets, but assets in Turkey and Russia have taken a further leg down due to tensions between the two arising from the conflict in Syria. An …
28th February 2020
Loose policy supports rapid growth, but imbalances building Turkey’s economy grew by a rapid 1.9% q/q in Q4 of last year and loose policy will keep it motoring along over the coming quarters. But there are increasing signs that strong growth is fuelling a …
Weakness in industry is spreading February’s batch of Economic Sentiment Indicators (ESIs) for Central and Eastern Europe provided yet more evidence that weakness in industry is spreading to domestically-focused sectors. There are no clear signs of a hit …
27th February 2020
Concerns about the outbreak of coronavirus have taken their toll on the region’s financial markets over the past month. While the direct trade exposure of Emerging Europe to China is limited and there have been few reported cases of the virus in the …
26th February 2020
The slightly more hawkish tone of the Hungarian central bank’s post-meeting statement supports our view that the central bank will deliver a 10bp hike in the overnight deposit rate next month. However, the MNB is a dovish institution and, with inflation …
25th February 2020
Hungary’s central bank will probably use Tuesday’s meeting to flag a shift towards tightening and we expect a small hike in the overnight deposit rate in March. But this is likely to be a symbolic gesture more than anything else. Monetary policy will stay …
24th February 2020
Turkish gov’t seeks more control over local banks The Turkish government’s plans to transfer the opposition party’s stake in a major bank to the Treasury adds to the evidence that it is trying to gain more leverage over the banking sector. But there are …
21st February 2020
Economy started 2020 in a low gear The batch of Polish activity data for January suggest that GDP growth was broadly steady at around 3.2% y/y at the start of the year. With headwinds to growth building, the risks to our 2020 GDP growth forecast of 3.0% …
Economic growth looks to have held steady at start of 2020 January’s batch of Russian activity data suggest that GDP growth was broadly steady at around 1.8% y/y. While some of the recent props to growth have started to fade, policy support is likely to …
20th February 2020
The Turkish central bank (CBRT) shrugged off rising inflation and lowered interest rates by another 50bp today, but the accompanying statement was a little more cautious and we think that the easing cycle is nearing an end. With inflation set to surprise …
19th February 2020
Inflation baring its fangs Inflation rose above the upper level of central banks’ targets in Central Europe in January for the first time in over seven years. Inflation jumped in Hungary (4.7%), Poland (4.3%) and the Czech Republic (3.6%), largely …
14th February 2020
