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The renewed slide in oil prices has been an important factor behind the latest deterioration in sentiment towards EMs over recent weeks. However, with the obvious exception of Russia, most countries in Emerging Europe stand to gain from lower commodity …
13th January 2016
The lurch to a more populist policymaking agenda in Poland hasn’t made much difference to the near-term economic outlook, but it will harm medium-term growth prospects and, more immediately, depress asset prices. We’re revising down our zloty forecast – …
The fall in Russian inflation in December to 12.9% y/y provided the first clear sign that the impact of the 2014 ruble crisis has started to unwind. And we think that inflation is likely to decline further over the coming months. Nonetheless, the latest …
12th January 2016
The weak Czech inflation figure for December, of just 0.1% y/y, reinforces our view that the National Bank will extend its commitment to keeping policy loose. We expect the MPC use the next few policy meetings to pledge to keep the exchange rate ceiling …
So far as Russia is concerned, the best that can be said for 2016 is that it should be a year in which the economy stabilises. Even a marked rebound in oil prices would be unlikely to spur a return to reasonable rates of economic growth and consumers in …
11th January 2016
Turkey’s balance of payments data for November showed that exports remained weak. But, on a more positive note, the current account deficit continued to narrow and the figures also indicated that the composition of external financing improved. … Turkey …
Turkish industrial production expanded by a weaker-than-expected 3.5% y/y in November, but the data suggest that growth over Q4 as a whole was strong. … Turkey Industrial Production …
8th January 2016
Romanian National Bank Governor Mugur Isarescu gave little away at this afternoon’s post-meeting press conference, but the tone of the accompanying statement suggested that the MPC is concerned about both deteriorating sentiment towards emerging markets …
7th January 2016
December’s Economic Sentiment Indicators for Central and Eastern Europe suggest that activity may have eased a little from November. Even so, it looks like growth over Q4 as a whole was stronger than in Q3, at close to 4% y/y. … Economic Sentiment …
The 0.5% y/y fall in Polish consumer prices was larger than we had expected and, coming alongside the latest fall in oil prices, raises the risk that inflation will remain in negative territory in the early part of this year too. … Poland Flash CPI …
4th January 2016
December’s manufacturing PMIs for Emerging Europe provided an early sign that the latest fall in oil prices has hit activity in Russia. Meanwhile, the stronger-than-expected Turkish inflation figure for December reinforces our view that the central bank …
The decision by the Turkish central bank to keep interest rates on hold, when hikes had been widely anticipated, will probably result in renewed concerns that the MPC’s decisions are being swayed by government pressure. The accompanying statement did …
22nd December 2015
The latest fall in oil prices has added to the uncertainty over the outlook for Russia’s economy. In this Update we revisit the mechanisms through which lower oil prices affect Russia and outline what might happen to the economy at various oil prices. … …
21st December 2015
Inflation still looks likely to rise in most EMs next year, despite the recent slump in oil prices. However, the rebound will now be more gradual, which will allow central banks in most economies to keep interest rates lower for longer. … Latest oil price …
The Russian ruble was the worst performing EM currency over the past month, tumbling by 6% against the US dollar on the back of the latest decline in oil prices. But currencies elsewhere in the region have been the best performers in the EM world this …
17th December 2015
The latest batch of Russian activity data, released today, show that the recovery slowed last month and, worryingly, this came before the latest fall in oil prices. In contrast to Russia, November’s economic data from Poland point to strong growth of …
The Czech National Bank’s MPC once again struck a dovish note in the post-meeting statement and, although the Council didn’t extend its commitment to the koruna cap beyond next year (as we thought might happen), we still expect monetary conditions to …
16th December 2015
The accompanying press release to today’s MPC decision in Hungary, at which the deposit rate was left unchanged at 1.35%, was dovish and suggested that unconventional measures to loosen policy will be taken. As a result, although we don’t expect cuts in …
15th December 2015
The accompanying statement to today’s MPC meeting in Russia, at which the repo rate was left unchanged, was decidedly cautious and it’s clear that policymakers are waiting for firmer signs that inflation is easing. CPI figures published over the coming …
11th December 2015
Economic performances have diverged markedly across Emerging Europe this year, due in large part to the collapse in oil prices. Lower energy costs have kept inflation low in Central and South Eastern Europe, boosting real incomes and allowing monetary …
The sharp pick-up in Turkish GDP growth in Q3, to 5.4% y/y, may help to alleviate some of the political pressure on the central bank to keep policy loose. This reinforces our view that the central bank will raise interest rates at this month’s MPC …
10th December 2015
One factor that has supported growth in Central and Eastern Europe this year is a rise in EU structural funding, but this looks set to ease in 2016. As we explain in this Watch , while this will reduce one prop to investment, we don’t expect it to …
9th December 2015
The much weaker-than-expected rise in Czech consumer prices last month, of just 0.1% y/y, is unlikely to raise fresh concerns about deflation. But even so, it may tip the balance on the MPC in favour of extending their commitment to keeping the exchange …
The pick-up in Turkish industrial production growth in October, coming alongside an uptick in the latest business surveys, suggests that the economy continued to perform strongly in Q4. Elsewhere, although inflation data out of Hungary were a little …
8th December 2015
This report is only available as a PDF. Click to download. … Russia CPI (Nov.) …
4th December 2015
The jump in Turkish inflation to a much higher than expected 8.1% y/y in November reinforces our view that the central bank will be forced to hike interest rates over the coming months. … Turkey CPI …
3rd December 2015
Having contracted in 2015, we expect the economy of Emerging Europe to return to growth in 2016. This will be driven in large part by an improvement in conditions in the region’s largest economy, Russia, which should exit recession over the coming …
1st December 2015
Last month’s manufacturing PMIs for Emerging Europe brought further evidence that the region’s industrial sector strengthened in the final quarter of the year. … Manufacturing PMIs …
The economic impact of the Russian sanctions on Turkey announced this weekend will, in general, probably be limited. Our best estimate of the maximum losses to the Turkish economy is around 0.5% of GDP a year. The tourism sector is likely to be the …
30th November 2015
November’s Economic Sentiment Indicators provided further evidence that Central and Eastern Europe’s recent strong performance continued into the final quarter of the year. The surveys suggest that regional GDP growth could have picked up to around 4.0% …
27th November 2015
The raft of preliminary GDP data published over the past month showed that the slump in regional growth bottomed out in the third quarter of this year. We estimate that, in aggregate, GDP in Emerging Europe contracted by 0.5% y/y, a better outturn than …
26th November 2015
Although aggregate EM inflation edged down in October, the number of EM economies that recorded a rise in inflation last month exceeded those where it fell. We expect this trend to continue in 2016. … Inflation now rising in more EMs than it is …
The Turkish central bank left interest rates on hold today, but given the economy’s exposure to Fed tightening and with inflation set to rise even further, rate hikes look likely over the coming months. … Rate hikes looming in …
24th November 2015
The Turkish lira and stock market jumped in the immediate aftermath of the country’s election at the start of the month, which lifted the political uncertainty that had weighed on investors since June. But the markets have reacted badly to the …
23rd November 2015
Despite a sharp fall in energy revenues, there is no imminent risk of a fiscal crisis in Russia. Accordingly, we don’t share the view that the government needs to tighten policy immediately; indeed, there is merit in keeping policy support in place given …
18th November 2015
Today’s flash Q3 GDP data confirmed that the Central and South Eastern European economies continued to grow robustly, despite fears of a widespread EM slowdown. Indeed, this year is shaping up to be the strongest for the region since 2008. … Central & …
13th November 2015
Turkey’s monthly current account balance rose a little further into surplus in September, but this was mainly due to lower energy imports and an improvement in the gold trade balance. The underlying performance of exports remained poor and there are signs …
11th November 2015
The slowdown in Turkish industry in September means that industrial production growth over Q3 as a whole was a little slower than in Q2. Elsewhere, the weaker-than-expected inflation data from the Czech Republic in October mean that the MPC is set to …
9th November 2015
Last month’s Polish election heralds a shift towards more populist policymaking under Law and Justice (PiS). In this Watch , we look at which areas are most likely to see a shift in policy and what the economic impact might be. The short point is that …
6th November 2015
The press conference following the Romanian MPC meeting earlier today confirmed our view that the resignation of the Prime Minister yesterday would prompt the Council to adopt a more cautious line. Nonetheless, we don’t think the outlook for interest …
5th November 2015
Russian inflation edged down again in October, to 15.6% y/y, but the headline rate remains extremely high and this figure alone is unlikely to be enough to tip the balance on the MPC in favour of a rate cut. … Russia CPI …
On the face of it, the fall in Turkish inflation last month to a weaker-than-expected 7.6% y/y looks encouraging. However, this masks the fact that core inflation rose to its highest rate in almost a year. With the headline rate likely to rise again, we …
3rd November 2015
The larger-than-expected 0.8% y/y fall in Polish consumer prices last month is likely to reinforce the MPC’s dovish stance. And interest rate cuts could come back onto the agenda, particularly if the newly-elected Law and Justice government nominates a …
2nd November 2015
The Turkish lira and stock market have rallied following Sunday’s election results, which delivered the ‘Goldilocks’ scenario of a small AK party majority in parliament. This has alleviated concerns about further political uncertainty, but it remains to …
Manufacturing PMI surveys for October showed that industry across Emerging Europe started Q4 on a strong note. The improvement in Poland was particularly encouraging, and Central Europe in general appears to have held up relatively well. Meanwhile, the …
Opinion polls suggest that Sunday’s parliamentary election in Turkey will deliver another hung parliament, and immediate attention is likely to concentrate on the likelihood of a coalition being formed. But our sense is that investors should pay more …
30th October 2015
The Russian central bank kept its benchmark interest rate on hold today, but there was a clear shift in tone in the accompanying statement, suggesting that the MPC plans to resume the easing cycle once inflation starts to fall back. The next rate meeting …
Although aggregate EM inflation slowed slightly in September, it is set to rise in the months ahead as the drag from last year’s slump in oil prices fades. … EM inflation to rebound …
This month’s Economic Sentiment Indicators for Central and Eastern Europe were encouraging – our regional aggregate rose to its highest level since September 2008. Admittedly, there were some tentative signs that the VW emissions scandal may have hit …
29th October 2015
Central Europe has been a rare bright spot in the emerging world over the past few quarters, but recent developments have taken some of the gloss off. Activity and survey data for August and September were notably softer, mirroring some of the figures …
28th October 2015
