Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Central Europe catches Germany’s cold The weak batch of Q4 GDP data for Central & Eastern Europe show that the downturn in Germany took a bigger toll on growth across the region. Prolonged weakness in the euro-zone and softer domestic demand mean that …
14th February 2020
Economy posts strong performance in Q4 The stronger-than-expected Turkish activity data for December suggest that the economic recovery gathered steam in the final quarter of last year. Looser fiscal and monetary policy will keep the economy motoring …
13th February 2020
The Turkish authorities have kept a tight grip on the lira in recent weeks but we don’t think that this can continue for much longer and expect the currency to fall by 20% against the dollar by end-2020. The longer that policymakers intervene to prop up …
10th February 2020
Romania moves one step closer to snap elections Romania’s three-month old government collapsed this week following its defeat in a no confidence vote brought by the opposition. This increases the chance of early elections this year, bringing forward …
7th February 2020
The Russian central bank governor’s post-meeting press conference reinforced the message that, following today’s 25bp interest rate cut to 6.00%, further easing lies in store. We maintain our view that there will be another 50bp of rate cuts in the …
The statement and press conference following today’s Czech MPC meeting confirmed that the surprise decision to hike interest rates by 25bp, to 2.25%, will be a one-off. Policymakers will probably maintain a hawkish tone over the next few months but, as …
6th February 2020
Drop in inflation to prompt rate cut tomorrow The larger-than-expected drop in Russian inflation to just 2.4% y/y in January primarily reflected the unwinding impact of last year’s VAT hike. But it will probably be enough to prompt the central bank to cut …
The investment booms that provided a key support to Central and Eastern Europe probably peaked last year. This is one reason why we think that regional GDP growth will slow in 2020-21. Investment booms tend to follow similar cycles across Central and …
5th February 2020
Evidence of recovery in late 2019 The Russian full-year GDP growth figure of 1.3% in 2019 was well below 2018’s outturn of 2.5%, but the figures suggest that growth accelerated a little further in the final quarter of last year, to 1.8% y/y. The breakdown …
3rd February 2020
Weakness in Central Europe, but Turkey’s recovery gathering pace January’s manufacturing PMIs for Central Europe remain consistent with a further slowdown in industrial sectors over the coming months. Elsewhere, the jump in Turkey’s PMI to a 22-month high …
Rising inflation won’t deter CBRT from further rate cuts The rise in Turkish inflation in January is unlikely to sway the central bank (CBRT) away from another interest rate cut this month as policymakers cave into pressure from President Erdogan. But …
CBRT’s output gap assumptions seem implausible In its Inflation Report released this week, Turkey’s central bank (CBRT) stuck to its forecast for inflation to fall back in 2020-21, but this rests on the farfetched assumption that a negative output gap …
31st January 2020
Sentiment slumps at the start of 2020 January’s batch of Economic Sentiment Indicators (ESIs) for Central and Eastern Europe point to regional GDP growth slowing to a fresh three-year low of 3.2% y/y in Q1. With signs that weak external demand is …
30th January 2020
Regional GDP growth in Emerging Europe appears to have picked up from 2.2% y/y in Q3 to around 2.5% y/y in Q4. This was predominantly driven by a recovery in Turkey’s economy, where policymakers are pulling out all the stops to support activity. Russia …
29th January 2020
President Putin’s plans to amend Russia’s constitution so that he can wield power beyond 2024 have fired up the Moscow rumour mill. But from an economic perspective, the much more important development has been the accompanying shift in the government’s …
Investment dragged down growth last year The weaker-than-expected 2019 Polish GDP growth figure of 4.0% suggests that the economy slowed sharply in the final quarter of last year. Softer activity reinforces our view that the MPC will look through the …
Economy loses momentum at the end of Q4 December’s batch of Russian activity data suggests that GDP growth in Q4 was broadly unchanged from Q3’s 1.7% y/y, but the economy appears to have lost steam at the end of the quarter. That strengthens the case for …
28th January 2020
CBRT’s inflation forecasts to be proven wrong Comments from Turkey’s central bank (CBRT) governor in Davos this week suggest that further rate cuts lie in store. This is premised on the view that inflation will fall back, which is likely to prove …
24th January 2020
Overview – Regional GDP growth is likely to gather pace this year as loose monetary and fiscal policy bolsters recoveries in Russia and Turkey and helps to cushion the slowdown in Central Europe. Interest rates will probably end this year lower than …
23rd January 2020
Economy slowed further in Q4 The batch of Polish activity data for December suggest that GDP growth weakened from 3.9% y/y in Q3 to a three-year low of 3.5% y/y in Q4. The slowdown in growth reinforces our view that the central bank will look through …
Policy loosening will drive a stronger recovery in Turkey’s economy than most expect this year, but this is likely to come at the cost of higher inflation, a widening current account deficit and falls in the lira. That’s likely to force the central bank …
21st January 2020
Russia: the taxman cometh (but may giveth) Russia has been gripped by political turbulence this week after President Putin announced a series of proposed constitutional amendments, which are expected to allow him to wield power once his presidential term …
17th January 2020
The Turkish central bank (CBRT) cut interest rates by another 75bp today as policymakers bowed to pressure from President Erdogan for looser policy. More rate cuts are likely in the next few months. But the strong economic recovery will cause inflation to …
16th January 2020
Hungary’s economy is likely to lose some steam this year, but loose policy will ensure that growth remains above potential. This will keep inflation high and economic imbalances will continue to build . The outperformance of Hungary’s economy last year …
15th January 2020
Economic recovery gathers pace in Q4 The Turkish industrial production and retail sales figures for November were a mixed bag but, on balance, suggest that the economy gathered pace in Q4. Looser policy means that we think the economy will record faster …
14th January 2020
Risks still prominent in Turkey’s banks Turkey’s financial markets have rebounded in recent days, partly because fears of a US-Iran war have eased but also because local banks have sounded more bullish on their own performance this year. But long-standing …
10th January 2020
The recent rise in inflation to multi-year highs across most of Central Europe has only a little further to run, but it will stay above central banks’ targets across the region this year. Policymakers will probably look through this and keep interest …
9th January 2020
Growth comes off the boil at the end of 2019 The European Commission’s batch of Economic Sentiment Indicators (ESIs) fell sharply in December, although they remain consistent with regional GDP growth holding steady at around 3.6% y/y in Q4. Robust …
8th January 2020
Russian inflation dips, paving the way for rate cut The drop in Russian inflation in December, combined with comments from the central bank governor, support our view that there will be at least one more interest rate cut in the current easing cycle. …
3rd January 2020
CBRT to shrug off higher inflation and cut interest rates this month The stronger-than-expected rise in Turkish inflation in December means that this month’s interest rate decision will be a close call. For now, we think that the central bank will cave …
Surveys for Central Europe still point to weakness ahead December’s batch of manufacturing PMIs for Central Europe remain consistent with a further slowdown in industrial production growth over the coming months, although there are tentative signs that …
2nd January 2020
Weak lira to (eventually) force rate hikes in Turkey The Turkish lira has been one of the worst performing EM currencies this month and this probably sets the scene for next year. This is a key reason why we think that the central bank will ultimately …
20th December 2019
Policymakers in Russia and Turkey have loosened monetary policy more than elsewhere in the emerging world over the past few months, but we think that easing cycles are nearing an end. Communications from Russia’s central bank suggest that, after one more …
17th December 2019
Ukraine: hard work begins after securing IMF deal Ukraine is on the cusp of securing a new IMF bailout, but history suggests that the government will struggle to meet the Fund’s demands, which could put the recent rally in the bond market into reverse. On …
13th December 2019
The Russian central bank governor’s post-meeting press conference was characteristically cautious, supporting our view that following today’s 25bp interest rate cut, there will probably be just one more 25bp reduction (to 6.00%) in the current easing …
Industry stutters at start of Q4, likely to be a blip October’s industrial production figures suggest that Turkey’s economy made a soft start to Q4 but more timely evidence suggest that this will prove a blip. Looser monetary and fiscal policy is likely …
The 200bp interest rate cut (to 12.0%) by the Turkish central bank as well as other recent tweaks to boost lending suggest that policymakers will try to meet President Erdogan’s demand to bring rates down to single digits and bolster growth. As a result, …
12th December 2019
The recent strength of motor vehicle production across Central Europe will be increasingly difficult to sustain as weakness in the German economy persists. The Czech Republic’s vehicle sector is likely to struggle the most as a result, while Hungary’s …
There is a growing expectation that Russia’s government will adjust the way the National Welfare Fund invests next year. In this Update , we take a closer look at what this means and explain why, contrary to hopes in some quarters, it is unlikely to …
11th December 2019
Falling inflation keeps door open to easing The drop in Russian inflation to just 3.5% y/y in November increases the probability of another 50bp interest rate cut at the central bank’s meeting next Friday although, on balance, we think a 25bp rate cut is …
6th December 2019
Old habits in Turkey Data published this week provided familiar signs that growth in Turkey is increasingly unbalanced. The Q3 GDP figures published on Monday showing growth of 0.4% q/q caused some to highlight that the economy is slowing (growth in Q1 …
Inflation jump won’t prevent rate cuts, for now The rise in Turkish inflation in November is likely to mark the start of a steady upward trend over the next couple of years. This won’t prevent the central bank from cutting interest rates further at the …
3rd December 2019
Central Europe remains weak, Turkey continues to recover November’s batch of manufacturing PMIs for Central Europe showed a slight improvement on October’s figures but nonetheless remain consistent with a further slowdown in industrial output over the …
2nd December 2019
Economy continues to recover, strong growth likely in Q4 Turkey’s economy grew by a weaker-than-expected 0.4% q/q in Q3 but the lagged effects of policy loosening mean that the recovery is likely to gather pace over the next few quarters. The authorities’ …
Turkey: interventionist policy stores up problems Interventionalist policymaking in Turkey has come back on the radar this week. This is likely to lead to a misallocation of resources and adds to the reasons to think that the country’s next crisis could …
29th November 2019
Q3 GDP figures due next week are likely to show that Turkey’s economic recovery has continued and we think that year-on-year growth could reach as high as 5-6% in Q4 and early 2020. But policy loosening and rapid credit growth risk fuelling a fresh …
Headline inflation has eased across Central and Eastern Europe (CEE) over the past few months, but that was entirely due to falling food and fuel inflation; core price pressures have continued to build. Indeed, core inflation hit multi-year highs in …
28th November 2019
Growth remains strong in Q4 The European Commission’s batch of Economic Sentiment Indicators (ESIs) for November suggest that, after slowing to a three-year low of 3.6% y/y in Q3, regional GDP growth picked up to 4.0% y/y at the start of Q4. The ESIs rose …
The recent strong performance of Central and Eastern Europe (CEE) will probably continue for a few more years as fiscal and monetary policy remain loose. But this is likely to cause some of the pressures and imbalances that have started to build up during …
Economy losing further momentum Polish activity data for October showed that the economy lost a bit more momentum at the start of Q4. Our GDP Tracker points to growth slowing to around 3.6% y/y, from 3.9% y/y in Q3. Activity in the industrial sector …
25th November 2019
