Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
The recovery in GDP growth in Emerging Europe is close to peaking and, while we expect the region’s largest economy, Russia, to strengthen over the next 12 months or so, that will be more than offset by weakness elsewhere. The cycle in Central and Eastern …
6th July 2017
The press statement that followed today’s MPC meeting in Poland remained extremely dovish, but it does seem that there are growing divisions within the Council. With wage growth and core inflation likely to rise over the coming months, we expect more MPC …
5th July 2017
Last month’s batch of manufacturing PMIs in Emerging Europe suggest that growth in Central Europe remained robust at the end of Q2, while Turkey’s economy strengthened. Meanwhile, the sharper-than-expected fall in Turkish inflation last month, to 10.9% …
3rd July 2017
Strong growth in Central and Eastern Europe (CEE) in the first half of the year has been accompanied by further evidence that labour markets are tightening. Unemployment rates have fallen to record lows in the major economies and wage growth has picked …
30th June 2017
We have revised our forecasts for the Russian ruble and Turkish lira and we now expect a smaller rise in the ruble versus the dollar by the end of next year. We also now think future falls in the lira against the dollar will be smaller. … New forecasts …
29th June 2017
The hawkish tone of today’s post-meeting statement and press conference supports our non-consensus view that the first interest rate hike in the Czech Republic will come at August’s MPC meeting. Following that, we see the policy rate being raised to 1.00% …
June’s impressive batch of Economic Sentiment Indicators suggests that regional growth in Central and Eastern Europe remained above 4% y/y in Q2. The continued strong run of survey data supports our view that GDP growth across the region will be faster …
We suspect that economic growth in Emerging Europe is close to peaking in this cycle. Growth in Russia is likely to accelerate further over the course of 2017-18, but this will be more than offset by weakness in Turkey and a slowdown in Central and South …
28th June 2017
The recent fall in oil prices will keep EM inflation close to its current multi-year low for longer, but it won’t trigger a collapse in inflation. … Falling oil prices will keep inflation subdued for …
23rd June 2017
The Hungarian MPC’s extremely dovish post-meeting press statement provided further evidence that policymakers are as yet untroubled by growing signs of capacity constraints. Monetary policy is set to remain extremely loose over the rest of this year. But …
20th June 2017
May’s activity data from Russia were generally a bit stronger than expected and add to evidence that the economic recovery has continued to strengthen in Q2. … Russia Activity Data …
The batch of robust Polish activity data for May suggests that the economy is probably growing by around 4.0% y/y, in line with Q1’s outturn. … Poland Industrial Production & Retail Sales …
Relatively hawkish comments from the Russian central bank today appear to be aimed at dampening hopes that the pace of monetary easing might be stepped up. But while the policy rate is likely to be cut in small steps, low inflation should allow a lengthy …
16th June 2017
The Turkish central bank ended the recent tightening cycle today, but high inflation, strong GDP growth (this year at least), and hawkish comments from the MPC, mean that a shift towards interest rate cuts this year is unlikely. … Turkish MPC ends …
15th June 2017
Legislation passed by the US Senate to tighten the sanctions regime on Russia provides further reason to think that medium-term growth in Russia will be extremely weak. But the near-term economic repercussions are likely to be limited and, as things …
The much sharper-than-expected increase in Turkish GDP in Q1, of 5.0% y/y, has prompted us to revise up our GDP growth forecast for the year as a whole to 4.3%. At the margin, today’s figures make it more likely that the central bank will resist pressure …
12th June 2017
The press conference that followed today’s MPC meeting in Poland highlighted that some members of the Council are becoming more hawkish. While this supports our view that the policy interest rate will eventually be hiked by more than most expect over the …
7th June 2017
Russian headline inflation was unchanged in May, but the fall in core inflation to below the central bank’s target supports our view that the policy interest rate will be lowered again, from 9.25% to 9.00%, at next week’s MPC meeting. … Russia CPI …
6th June 2017
Turkish GDP figures due next week are likely to show that the recovery levelled off in the first quarter at around 3.5% y/y. But there are signs of a healthy rebalancing of the drivers of growth. … Turkey’s economic recovery levelling …
The combination of strong growth and rising core inflation has led some members of Poland’s MPC to strike a more hawkish tone in recent months. However, while this is consistent with our view that interest rates will ultimately be raised by more than the …
5th June 2017
The modest decline in Turkish inflation, to 11.7% y/y last month, supports our view that the MPC will end the recent monetary tightening cycle at next week’s meeting. … Turkey CPI …
Our latest Banking Heat Map paints a broadly positive picture. Banks in Romania and Hungary – which have been among the weakest in Emerging Europe over the past decade – are returning to health, and there is growing evidence that non-performing loans have …
2nd June 2017
Last month’s PMIs for Emerging Europe suggest that conditions in the manufacturing sectors of the region’s two largest economies – Turkey and Russia – are improving. Moreover, manufacturing in Central Europe appears to have remained strong in Q2. … …
1st June 2017
Aggregate EM inflation remained close to an eight-year low in April, largely reflecting a slump in food inflation in major economies such as China and Brazil. While this weakness will soon reverse in both countries and push up EM food inflation, there are …
30th May 2017
Despite a gradual shift in the consensus over the past couple of months, we still think that markets are underestimating the extent to which inflation and interest rates in Russia are likely to fall over the next year or so. This is one reason why we …
May’s Economic Sentiment Indicators remained strong across Central and Eastern Europe, suggesting that regional growth stayed above 4% y/y in Q2. These figures support our above-consensus growth forecasts for the region this year. If anything, the risks …
Currencies in Central Europe have been the best performing in the emerging world over the past month and we think that they should generally fare well in the coming years. … Central Europe’s currencies …
26th May 2017
A recovery in construction appears to have been the key driver of the marked acceleration in GDP growth across Central Europe in Q1. This rebound is likely to be sustained over the course of 2017, which is one reason why we think growth in the region will …
The combination of strong growth and rising inflation in Central and Eastern Europe (CEE) has shifted attention to when and how policymakers might respond. To help answer this, we’ve created Taylor Rules for the region’s economies. These suggest that …
25th May 2017
First quarter GDP estimates for Emerging Europe published this month beat expectations across the board and suggest that growth in the region as a whole picked up to a three-year high of 2.3% y/y. Romania was the region’s star performer, growing by close …
23rd May 2017
The better-than-expected batch of Russian activity data for April indicate that the economy probably grew by 0.7-0.8% y/y at the start of Q2, up from 0.5% y/y in Q1. … Russia Activity Data …
22nd May 2017
We wouldn’t read too much into the batch of weak April activity data for Poland, which were depressed by calendar effects. The underlying trend still seems to be one of strong growth. … Poland Industrial Production & Retail Sales …
19th May 2017
The statement that followed today’s MPC meeting in Poland was broadly unchanged from previous months and suggests that any change in interest rates is unlikely in the coming months. But with core price pressures set to build over the second half of the …
17th May 2017
First quarter GDP data from Russia were a touch stronger than expected and are all the more encouraging given that calendar effects will have pulled down the growth figure for Q1. Our GDP forecasts for both 2017 and 2018 remain above the consensus. … …
Financial markets in the Czech Republic have, for the most part, shrugged off the various twists and turns in the political crisis that has gripped the country over the past couple of weeks. Accordingly, there is no reason to think that it will have any …
16th May 2017
The stronger-than-expected batch of Q1 GDP data from Central and South Eastern Europe means that risks to our above-consensus 2017 growth forecasts now lie to the upside. These figures also raise the likelihood that monetary policy normalisation in the …
In a recent Quick Take audio recording (available here) , we discussed why the Central Bank of Russia had caught the markets (but not us) off guard at its last two meetings and why interest rates are likely to fall further than most expect in the coming …
12th May 2017
One important consequence of the recent period of strong growth in Central and Eastern Europe is that economies are now running at close to full employment. We expect growth to remain robust over the next 12 months but, as output gaps close, underlying …
10th May 2017
Turkish industrial production growth in March was a little stronger than expected, but the 2.8% y/y expansion still paints a picture of a slow recovery from last year’s slump. … Turkey Industrial Production …
8th May 2017
The further fall in Russian inflation last month – and in core inflation in particular – reinforces our view that the central bank’s easing cycle has much further to run. We expect another interest rate cut at the next Board meeting in June and that rates …
5th May 2017
The Czech MPC’s statement accompanying today’s rate-setting meeting was generally quite dovish, but it does looks like the Council intends to start raising interest rates, albeit very slowly, this year. Accordingly, we are now pencilling in one hike in …
4th May 2017
The further rise in Turkish inflation in April, to 11.9% y/y, probably marks the peak for the headline rate, and it should slowly reverse course in the coming months. As things stand, our sense is that the central bank won’t follow up last month’s …
3rd May 2017
Last month’s PMIs for Emerging Europe suggest that manufacturing in Central Europe remained strong at the start of Q2, but highlight that the recoveries in Russia and Turkey are still fragile. … Manufacturing PMIs …
2nd May 2017
The Russian central bank’s 50bp interest rate cut to 9.25% today was larger than most (but not us) expected and, taken together with the relatively dovish tone of the statement, supports our view that the policy rate will come down much further than the …
28th April 2017
The continued strength of the Russian ruble this month has started to raise concerns among policymakers, with President Putin hinting that some form of action might be taken to stem the rise. At the margin, this makes the non-consensus 50bp interest rate …
27th April 2017
The rise in the Economic Sentiment Indicators for Central and Eastern Europe this month suggests that regional growth was probably close to 4% y/y at the start of Q2. These figures support our above-consensus growth forecasts for the region this year. … …
The Turkish MPC’s surprise move to tighten monetary policy further today via another hike in the late liquidity rate indicates that policymakers may have a greater resolve to tackle the country’s inflation problem than we (and most others) had …
26th April 2017
EM inflation remained at close to an eight-year low last month, driven in large part by weakening price pressures in the BRIC economies. Inflation has been on the rise in most other EMs, although not by enough to trouble policymakers. … EM inflation …
25th April 2017
The latest activity data from Russia and Turkey suggest that both economies lost momentum in Q1. Our GDP Trackers indicate that output in Russia stagnated in annual terms (following an expansion of 0.3% y/y in Q4) and that growth in Turkey weakened to …
24th April 2017
The latest surveys and monthly activity figures suggest that the economies of Central and Eastern Europe (CEE) made a strong start to the year. And Poland appears to have seen one of its fastest growth rates since the global financial crisis. This all …
21st April 2017
