Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Domestic demand has been subdued across much of Emerging Europe over the past five years in part due to the fact that households and firms have been deleveraging following the credit boom of the past decade. But while there has been a significant …
7th July 2014
The Czech National Bank (CNB) struck a dovish note at last week’s MPC meeting and is clearly concerned about the threat of deflation. For now, we suspect that the Bank is unlikely to take further action to ease policy. But there is a real risk that …
4th July 2014
The National Bank of Poland’s MPC struck a dovish note at this afternoon’s post-meeting pressconference, with Governor Belka flagging the possibility of an interest rate cut in the coming months. Thedecision looks finely balanced although, as things …
2nd July 2014
Last month’s manufacturing PMI data for Emerging Europe were disappointing. The recovery in Central Europe appears to have lost momentum in Q2, while the data provide further evidence that the Turkish economy is slowing. Elsewhere, the Romanian central …
1st July 2014
The latest activity data suggest that growth across Emerging Europe has strengthened in recent months, but there are a few clouds on the horizon. For a start, the latest data from Germany, the largest export market for much of the region, have softened. …
30th June 2014
Having kept interest rates on hold earlier today, the Czech MPC maintained its dovish stance at the post meeting press conference. Given the subdued outlook for inflation, monetary conditions are likely to stay extremely loose. We expect the two-week repo …
26th June 2014
A series of conciliatory remarks from both the Russian and Ukrainian authorities in recent days has given rise to hopes that tensions in Eastern Ukraine may start to ease. But despite promising signs at a government level, there are no signs yet that …
25th June 2014
The recent increase in oil prices is unlikely to have much of an impact on EM inflation, which in most places looks set to remain fairly benign. … Recent increase in oil price poses little threat to EM …
24th June 2014
Having cut its benchmark interest rate earlier today, the National Bank of Hungary gave a pretty clear signal in the accompanying communiqué that further rate cuts are on the cards and that monetary policy is set to remain loose for a considerable time. …
The muted reaction in the financial markets to the scandal currently engulfing the Polish government is testament to the economy’s underlying strength as well as the quality of the country’s institutions. Nonetheless, the latest events reduce the …
The nationalisation of the troubled Bulgarian bank, Corporate Commercial Bank, over the weekend has put attention back onto Emerging Europe’s fragile financial sector. Given the rise in non-performing loans, both in Bulgaria and in the rest of the region, …
23rd June 2014
May’s raft of Russian activity data suggests that, following a weak Q1, the economy hasn’t made a meaningful recovery in Q2. The rebound in the manufacturing sector has continued to gain momentum, but consumer-facing sectors have slowed. Meanwhile, …
20th June 2014
The strength of the recovery in Hungarian consumer spending has taken many, ourselves included, by surprise and retail sales are now rising at their fastest pace in a decade. However, this has been supported by government policies to reduce inflation and …
19th June 2014
Emerging European equities have rebounded over the past month, driven by Russian stocks. However, this has merely recouped losses seen earlier in the year. Looking ahead, we’re relatively downbeat on the outlook for Russian equities and the ruble, but …
18th June 2014
The Central Bank of Russia was never likely to alter interest rates at its meeting today – while the economy remains weak, high and rising inflation limits the room for policy support. Meanwhile, news that Russia has cut gas supplies to Ukraine following …
16th June 2014
The pre-crisis boom years in Central and Eastern Europe (CEE) led to an erosion of external competitiveness which is one reason why the recovery from the 2008-09 crisis has been so sluggish. But following five years of weak wage growth and currency …
11th June 2014
The Turkish economy held up well in Q1, in spite of a deepening political crisis and an aggressive hike in interest rates. However, growth was boosted by an improvement in Turkey’s gold trade balance, which is unlikely to last. More fundamentally, there …
10th June 2014
There are growing concerns that, as the euro-zone flirts with deflation, Central Europe could suffer a similar fate. However, the drivers of the deflation threat in the region are different and seem to be less pernicious to those in the euro-zone. Indeed, …
9th June 2014
Turkish Q1 GDP data due tomorrow are likely toreinforce optimism in the markets that the economyis undergoing a smooth rebalancing, with netexports taking over from domestic demand as themain driver of growth. However, while we wouldn’tdismiss rebalancing …
Yesterday’s move by the ECB is another reason to think that monetary policy in Central and Eastern Europe (CEE) will remain loose for longer than most people expect. However, the impact of the ECB’s announcement on financial markets in CEE has been …
6th June 2014
Growth in Emerging Europe is set to remain sluggish over the next couple of years, due in large part to continued weakness in the region’s largest economy, Russia, and a looming slowdown in the region’s second largest economy, Turkey. However, while …
4th June 2014
The Polish National Bank’s Governor, Marek Belka, was more dovish at this afternoon’s post-meeting press conference, and didn’t rule out the possibility of a cut in interest rates this year. However, while inflation is likely to remain extremely subdued, …
3rd June 2014
The rebound in Russian industrial production has taken many, including us, by surprise and has been interpreted by some as a sign that a weaker ruble has started to provide support to industry. However, a closer look at the data reveals that much of the …
2nd June 2014
At first glance, the sharp fall in Poland’s manufacturing PMI in May suggests that the economy has lost some steam, perhaps due to spillovers from the crisis in neighbouring Ukraine. However, it’s worth noting that other surveys as well as April’s …
The breakdown of Polish Q1 GDP data showed that the drivers of the recovery are broadening from exports to domestic demand. And it looks like the economy strengthened further at the start of the second quarter. All told, we think the economy should be …
30th May 2014
Russian equities and the ruble have been the region’s best performers over the past month following conciliatory remarks from Russia’s President Putin as well as Petro Poroshenko’s victory in Ukraine’s presidential election. Nonetheless, we think this …
29th May 2014
The Turkish government is becoming increasingly vocal in its demands for the central bank to cut interest rates, arguing that high interest rates risk making the lira overvalued which would damage external competitiveness. However, this distracts from the …
28th May 2014
Having cut interest rates earlier today, the National Bank of Hungary once again didn’t give much away about the outlook for monetary policy. The MPC appears to have become a little more dovish regarding the inflation outlook, suggesting that there could …
27th May 2014
The raft of Q1 GDP data released this month showed a growing divergence in the region. The crisis in Ukraine and threat of Western sanctions took a heavy toll on the Russian economy, which seems to be slipping into recession. By contrast, growth in the …
23rd May 2014
Following today’s surprise move by the Turkish central bank to lower its one-week repo rate, it looks like the MPC will continue to ease policy over the coming months. But given the country’s persistent external vulnerabilities and high rate of inflation, …
22nd May 2014
The sharp fall in many emerging market (EM) currencies over the past year has not led to the big EM-wide inflation shock that some were predicting. Looking ahead, we expect inflation across the emerging world as a whole to remain fairly subdued. … Impact …
21st May 2014
The benefits to the Russian economy from the $400bn deal signed earlier today between Russia and China are likely to be smaller than most seem to think. Instead, the importance of the deal is largely symbolic. In the midst of the Ukraine crisis, Russia …
The preliminary estimates of first quarter GDP for Central and South Eastern Europe provide further evidence of a gradual recovery in the region. The main factor behind the improvement in growth appears to be strengthening demand from the euro-zone, and …
15th May 2014
The recent rebound in the ruble has led the market to price in interest rate cuts by the Central Bank of Russia (CBR) over the coming months. We think this is premature. Leaving aside the fact that the ruble remains vulnerable to any further escalation of …
14th May 2014
This week’s preliminary first quarter GDP data for Central and South Eastern Europe are likely to show that the region’s economic recovery strengthened at the start of the year, in spite of fears of contagion from the crisis in Ukraine. Indeed, we think …
13th May 2014
The recent appreciation of the Turkish lira has taken many analysts – ourselves included – by surprise, not least because the economy still has large external vulnerabilities. These vulnerabilities mean that, despite the strengthening of the exchange rate …
President Putin’s call on pro-Russian separatists in eastern Ukraine to postpone a referendum on independence scheduled for this Sunday has once again raised hopes that a diplomatic resolution to the crisis in Ukraine might be found, and has triggered a …
8th May 2014
The Polish MPC hinted at today’s post-meeting press conference that it may not extend its pledge to leave interest rates unchanged beyond Q3. While this could be interpreted as a sign that the MPC is paving the way to raise interest rates before the end …
7th May 2014
With inflation in Romania set to rise over the second half of this year, it seems unlikely that there will be further interest rate cuts. But equally, large amounts of spare capacity in the economy mean that, barring a sharp fall in the leu, there will be …
6th May 2014
The surprising fall in Poland’s manufacturing PMI last month could be interpreted as a sign that the crisis in Ukraine is taking its toll on Central and Eastern Europe. However, we would be cautious about reading too much into this. Other leading …
2nd May 2014
The approval by the IMF of its $17bn financial support package for Ukraine is likely to ease concerns that the economy could suffer a near-term crisis, but severe challenges remain. The short-term pain stemming from the programme could well be greater …
1st May 2014
Having cut its benchmark interest rate earlier today, the National Bank of Hungary appears to be keeping all its options open regarding future movements in the policy rate. For what it’s worth, we think today’s cut probably marked the end of the easing …
29th April 2014
With Russia facing further sanctions from the West over its alleged involvement in the turmoil in the east of Ukraine, in this Focus we answer five key questions about the potential economic and financial market implications for Russia. The key point is …
28th April 2014
An acceleration in inflation, in part due to the recent sharp drop in the ruble, caused Russia’s central bank to hike interest rates by 50bp today. Looking ahead, with inflation likely to remain high and the ruble vulnerable to a further escalation in …
25th April 2014
The current period of subdued inflation in the emerging world shows no signs of nearing an end. One possible risk to the outlook is an El Niño, which weather forecasters warn could be on its way, and has the potential to cause serious disruption to the …
24th April 2014
Financial markets across Emerging Europe have proved relatively resilient to the recent escalation in political unrest in eastern Ukraine. But at the same time, the recovery from the losses earlier in the year has been disappointing, meaning that Emerging …
23rd April 2014
March’s activity data show that although the crisis in Ukraine and the first round of Western sanctions have not caused Russia’s economy to collapse, annual growth has still slowed substantially and output may have contracted in quarter-on-quarter terms …
17th April 2014
The latest activity data show that the recovery in Central Europe that started in the second half of last year gathered pace in Q1. Our GDP trackers suggest that growth in the Czech Republic, Hungary and Poland could have picked up to as much as 3.5% y/y. …
16th April 2014
The escalation of unrest in the east of Ukraine has thrust the issue of Western sanctions against Russia back onto the agenda. No side would win in a tit-for-tat exchange of sanctions, but by the same token we suspect that Russia is more vulnerable to …
15th April 2014
The discussion about how to soften the fallout from the Ukraine crisis on the Russian economy has started to shift towards fiscal stimulus, with key ministers advocating looser fiscal policy earlier this week. But while fiscal stimulus could cushion the …
10th April 2014
