Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
The Turkish central bank (CBRT) kept its benchmark rates on hold today, but the accompanying statement struck a hawkish note in response to the latest fall in the lira. In addition, the Bank’s accompanying publication of its road map for monetary policy …
18th August 2015
Flash Q2 GDP data from Central and South Eastern Europe serve as a reminder that it’s not all doom and gloom for the emerging world. GDP in the region as a whole grew by a robust 3.5% y/y. The Czech Republic was the region’s star performer, and is now one …
14th August 2015
Markets have reacted negatively to news that coalition negotiations between the two largest parties in Turkey have broken down and that fresh elections are now highly likely. While we don’t think things are that bad – indeed, the very latest fall in the …
13th August 2015
The Polish economy remained in deflation in July, with consumer prices falling by 0.7% y/y, and the latest drop in oil prices may have pushed inflation deeper into negative territory this month. Even so, we don’t think policymakers will be overly …
Turkey’s current account deficit narrowed in dollar terms in June, but only because imports dropped by more than exports. Moreover, the financing of the deficit remains a source of vulnerability. Elsewhere, although inflation in Hungary came in at a …
11th August 2015
Russia’s recession deepened in Q2 of this year and with oil prices having since taken another leg down, the economic prospects for the coming quarters look pretty grim too. Industry appears to have been a major cause behind the deterioration in Q2, having …
10th August 2015
The raft of preliminary second quarter GDP data due to be released this week in Emerging Europe is likely to show that the recession in Russia deepened, but that growth in Central and South Eastern Europe remained surprisingly strong. … Q2 GDP data to …
The weaker-than-expected 0.5% y/y rise in Czech consumer prices last month may bethe first sign that the recent appreciation of the koruna is starting to drag downinflation. Even so, with the economy growing strongly and the impact from the fall inoil …
The faster-than-expected expansion in Turkish industrial production, of 5.5% y/y, in June was, in part, due to a rebound in the auto sector following strikes in May. But overall, this figure adds to the evidence that GDP growth in Q2 was stronger than in …
7th August 2015
The Czech MPC kept its policy interest rate and exchange rate ceiling unchanged earlier today, but the Council dropped its strongest hint yet in the accompanying press release that extremely loose monetary conditions will stay in place into 2017. This …
6th August 2015
Russian inflation picked up in July for the first time since March, but this was driven entirely by last month’s hikes in household utility tariffs. In contrast, core price pressures eased. Inflation should fall back early next year as the effects of the …
4th August 2015
Having left its policy interest rate on hold at 1.75% earlier today, the Romanian MPC used this afternoon’s press conference to suggest that the government’s plans to loosen fiscal policy raise the likelihood of interest rate hikes. For our part, though, …
The weakness of Turkish exports over the first half of this year can in part be pinned on temporary factors including bad weather, strikes in the automobile sector and problems in major trading partners. However, as we explain in this Focus , there is …
3rd August 2015
Last month’s PMIs for Emerging Europe suggest that the escalation of the Greek crisis had little impact on manufacturing in Central Europe. Meanwhile, there was good news from Turkey as the PMI ticked up, while last month’s CPI data showed that inflation …
The Russian central bank (CBR) cut its one-week repo rate by 50bp, to 11.0%, today, but the recent fall in the ruble triggered a clear shift in the Council’s tone, and policymakers are no longer committing themselves to lowering interest rates further. …
31st July 2015
Comments from Turkish central bank (CBRT) Governor Erdem Basci earlier today that the Bank is planning to move away from using its complex interest rate “corridor” and towards the use of a single policy rate should be welcomed as this would help to …
30th July 2015
The falls in July’s Economic Sentiment Indicators across much of Emerging Europe were disappointing in light of the rise in the German survey. But even so, the figures are still consistent with strong GDP growth of close to 4% y/y in the region at the …
The move by Russia’s central bank to halt its foreign currency purchases suggests that policymakers have become increasingly concerned by the recent slump in the ruble. But even so, the impact on both inflation and foreign currency debt from the ruble’s …
29th July 2015
The latest fall in global oil prices will not be enough to prevent a rise in EM inflation later this year. It is, however, another reason to think the rebound in inflation will be relatively benign, and that most EM central banks will be able to take a …
28th July 2015
Fears about a near-term and potentially messy default by Ukraine eased a little this month, providing some respite for the country’s sovereign dollar debt. But even so, some form of default still seems more likely than not. Meanwhile, equities and …
27th July 2015
Greece’s move towards a third bailout has brought relief to Central and South Eastern Europe where concerns about contagion were very real, particularly in the Balkans. While it is too early to say whether there has been a hit to consumer and business …
24th July 2015
The strength of the Czech koruna has raised concerns at the National Bank about a fresh slowdown in inflation and, in the first instance, we think the MPC will try to ease pressure on the currency by pledging to keep monetary policy loose for longer. …
23rd July 2015
The statement accompanying today’s Turkish central bank decision, at which interest rates were lef tunchanged, made it clear that the MPC isn’t reading too much into June’s much sharper-than-expected fall in inflation (and rightly so). We think inflation …
Recent concerns that Russia’s central bank is abandoning the ruble free float seem overdone. While policymakers will undoubtedly keep a close eye on the ruble and intervene on the FX market in order to smooth out fluctuations, we don’t think this means a …
22nd July 2015
Having cut its two-week deposit rate by a slightly larger-than-expected 15bp to 1.35% earlier today, the Hungarian MPC made it clear that no further rate cuts were likely. But at the same time, the Council pledged to keep interest rates on hold “for a …
21st July 2015
Russia’s activity data for June made for grim reading. The hit to consumer-facing sectors has been particularly severe, but industry has struggled too. We estimate that GDP contracted by around 5% y/y in Q2. In contrast, activity data for Poland, also …
17th July 2015
Polish deflation eased a little in June, but this was entirely the result of smaller falls in food and energy prices than in May. Meanwhile, it looks like core inflation edged down a little. … Poland Consumer Prices …
15th July 2015
The collapse in Russian industrial output in the second quarter appears to have been driven by the unwinding of one-off supports to a couple of sectors, as well further weakness in domestic demand. The boost to food production from the ban on food imports …
14th July 2015
The mechanisms through which the deepening crisis in Greece could spill over to banking sectors in Emerging Europe are complex and commonly misunderstood. However, as we explain in this Watch, they have the potential to be explosive. … “Grexit” and the …
9th July 2015
There are signs that the slump in the Russian economy is now close to bottoming out. However, we think that when the recovery does come, it is likely to be extremely weak at best. One reason for this is the fact that Russia now faces a large fiscal …
The small rise in Czech headline and core inflation in June provides early evidence that the recent labour market improvements and the strength of domestic demand are starting to feed through to consumer prices. At the margin, these data may prompt the …
The statement accompanying today’s Polish MPC meeting, at which the policy interest rate was left unchanged, sounded relatively sanguine on the risks posed by the deepening crisis in Greece to the growth and inflation outlook. Accordingly, we remain …
8th July 2015
The slowdown in Turkish industrial production growth in May, to 2.4% y/y, appears to be a result of strikes in the automobile sector. And, overall, the data still suggest that the economy expanded at a quicker pace in Q2 than in Q1. Elsewhere, the small …
The sharp slowdown in industrial production growth in both the Czech Republic and Hungary in May was distorted by working day effects. The underlying trend is one ofsteady growth in industry of around 5% y/y. … Czech & Hungary Industrial Production …
7th July 2015
The drop in Saudi Arabia’s ‘whole economy’ PMI to a record low last month suggests that growth has slowed in the second quarter. Elsewhere, after a disappointing start to the year, Egypt’s economy is finding its feet again. … Russia CPI …
6th July 2015
The sharp drop in Turkish inflation last month, to 7.2% y/y, was driven almost entirely by a fall in food inflation, while core price pressures remain worryingly strong. Moreover, in contrast to the consensus, we still think that inflation will rise, not …
3rd July 2015
Utility tariffs for Russian households and businesses were raised at the start of this month, fuelling concerns in some quarters that this could trigger a renewed pick-up in inflation. But the key point is that what matters for inflation is the difference …
2nd July 2015
The Greek crisis has cast a dark cloud over the outlook for Emerging Europe, but as we explain in this Focus , while “Grexit” is a risk for a few countries, it doesn’t present the same threat that it once did. We think growth in the region’s largest …
The National Bank of Romania pinned its decision to keep interest rates on hold earlier today (rather thancut them further) on concerns about contagion from the Greek crisis. And judging by the accompanyingpress release, the MPC seems to have taken the …
1st July 2015
Last month’s manufacturing PMIs for Emerging Europe provide further evidence thatthe Central European economies have shrugged off the deepening crisis in Greece.The surveys also suggest that the slump in the Russian economy may be close tobottoming out. …
With Greece’s bailout talks postponed (again), the country’s membership of the euro-zone is lookingprecarious. In this Update, we provide a primer on what “Grexit” might mean for Emerging Europe. … A primer on the implications of “Grexit” for Emerging …
26th June 2015
EM inflation is set to accelerate in the months ahead as downward pressure from thefall in oil prices late last year unwinds. This will ease concerns about deflation in anumber of EMs, including China. It will also bring an end to monetary policyloosening …
Having kept its policy interest rate and exchange rate ceiling unchanged earlier today, the Czech MPC struck a less dovish note at this afternoon’s press conference. For now, we remain of the view that the Council will keep interest rates near zero and …
25th June 2015
The deepening crisis in Greece has been met with a muted reaction in the financial markets inEmerging Europe and there are few signs that it has had any impact on economic activity in theregion. Nonetheless, the threat of “Grexit” has understandably cast …
The press release accompanying today’s decision by the National Bank of Hungary to lower its policy interest rate by 15bp to 1.50% hinted that the easing cycle has a little further to run. We have revised our rate forecast and have pencilled in an …
23rd June 2015
The Turkish central bank kept its key interest rates on hold today, but the accompanying statement suggested that the MPC remains too sanguine on the inflation outlook and the risks posed by the large current account deficit, particularly amid the current …
May’s activity data brought further bad news for the Russian economy, with the slump in industry and fixed investment deepening. All in all, our GDP Tracker suggests that output may have contracted by over 5% y/y last month. … Russia Retail Sales, …
18th June 2015
Polish activity data for May were a mixed bag, with strengthening consumer spending broadly offsetting weakness in industry. Overall, it looks like GDP may have grown by around 3.5% y/y, roughly in line with Q1’s outturn. … Polish Ind. Production, …
There appears to be a great deal of confusion about how Russia can use its oil funds to finance its budget deficit, with some arguing that by drawing them down in rubles the government can both finance domestic spending and preserve the value of its …
16th June 2015
The sharper-than-expected fall in Polish consumer prices last month reinforces our view that the central bank will be under little pressure to raise interest rates any time soon. The market, which is pricing in a rate hike before the end of the year, …
15th June 2015
