Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
The recent sell-off in Hungarian assets has turned the spotlight on other Emerging European assets. Even though any contagion risks are likely to be limited, 2012 promises to be a tough year for the region’s currencies and stock markets due to its banking …
12th January 2012
On the face of it, the most recent Turkish balance of payments data are encouraging. The current account deficit appears to be narrowing, while capital inflows have held up. But underlying this is the fact that the balance of payments is adjusting via a …
11th January 2012
Talks between Hungary and the IMF are now underway. And with recent comments from the government suggesting that it has discarded its objections to accepting IMF help, market sentiment has improved considerably. But while we think a deal will ultimately …
10th January 2012
A raft of data released over the past week paints a mixed picture for the Emerging Europe’s industrial sector. But even though production held up relatively well in the last months of 2011, weak survey data suggest it is on track to slow markedly in the …
9th January 2012
The National Bank of Romania (NBR) cut its benchmark interest rate today, as expected. Crucially, stable politics and an IMF backstop have provided the NBR with scope to cut rates in response to the deteriorating growth outlook. In contrast, the absence …
5th January 2012
With the forint falling to a record low against the euro today, the news from Hungary goes from bad to worse, coming on the back of the breakdown in negotiations with the IMF and EU last month, a credit rating downgrade to junk, rising bond yields and …
4th January 2012
Over the past week, the Turkish Central Bank (CBRT) has used above-target and rising inflation to justify further measures to tighten monetary policy. However, we think the threat of a disorderly balance of payments adjustment has been the major concern …
3rd January 2012
The eruption of anti-government protests in Russia has come at a time of growing strains in the country’s consumption-led growth model. But while hopes for reform are rising, the paradox facing investors is that these are more likely to gain traction …
20th December 2011
The National Bank of Hungary (NBH) hiked interest rates today, as expected. But with the government at loggerheads with the central bank, talks with the IMF seemingly having broken down and fresh signs of strains in the bond market, we think it would …
The past month has brought further evidence – if any were needed – that Emerging Europe will not escape unscathed from the gathering storm in the euro-zone. Unsurprisingly, perhaps, the region’s most export-dependent economies have so far been hit the …
19th December 2011
Headline inflation has picked up across much of Emerging Europe. But we don’t think this threat is as big as some commentators are suggesting since underlying inflationary pressures are subdued. With the growth outlook deteriorating, we have still …
14th December 2011
On the face of it at least, the latest rise in inflation in Central Europe is deeply worrying, not least since it has come against a backdrop of slowing growth. But a closer look at the data reveals that the pick-up in inflation has been driven by the …
13th December 2011
The Central Bank of Russia (CBR) has cut the amount of funds it provides via its overnight repo auctions to the lowest level in almost two months in an attempt to shore up the ruble against a backdrop of increasing political unrest. But while this – along …
12th December 2011
Today’s Q3 GDP data surprised on the upside but, as we expected, domestic demand slowed much more sharply than the headline GDP growth rate. The key point though, is that today’s data do not yet reflect the effects of monetary tightening seen since late …
Turkish Q3 GDP data, due next week, are likely to show that the economy slowed to around 5.5% on an annual basis and contracted over the quarter on the back of weaker domestic demand. But, crucially, this does not yet reflect the impact of tighter …
8th December 2011
We broadly agree with the consensus view that most emerging economies will hold up well in 2012. But with the US set to slow and the euro-zone heading towards break-up, the path ahead is going to be bumpy. Here are five developments that emerging market …
7th December 2011
The deepening turmoil in the euro-zone is likely to drag large parts of Emerging Europe into recession over the next year. Financial sector vulnerabilities mean that recession risks are greatest in Hungary, Ukraine and the Balkans – indeed, in the …
The blow to United Russia in the parliamentary elections means that Putin’s absolute control over Russian politics has weakened. The question now is whether this can act as a trigger for reform as Mr Putin seeks to restore his popularity. While the …
5th December 2011
November’s manufacturing PMI data brought further evidence – if any was needed – that the more open economies in Emerging Europe are following their Western European neighbours into recession. Even Polish manufacturers, which have so far escaped …
1st December 2011
Polish growth surprised on the upside in Q3, reinforcing the view that the economy is relatively well placed to weather the storm brewing in the euro-zone. But while Poland is less vulnerable to a renewed recession in Europe than its peers, it is not …
30th November 2011
If this afternoon’s 50bps hike in Hungarian interest rates was intended to shore up the forint, the move has flopped. But in truth it was always likely that a far larger increase would be needed to strengthen the currency. With the euro-crisis set to …
29th November 2011
This morning’s decision by the Central Bank of Russia (CBR) to keep its key interest rates unchanged was expected, but the accompanying statement suggests that policymakers are becoming increasingly worried about a liquidity squeeze in the banking sector. …
25th November 2011
We think that Russian inflation will hit a record low of 5.5% next year. Nevertheless, persistent capital outflows mean that monetary easing is off the cards for now. … Russian inflation to touch record …
24th November 2011
Austria’s decision to restrict lending by its banks to subsidiaries in Emerging Europe reflects a broader shift in sentiment on the part of Western banks away from supporting units further east. This in turn makes Emerging Europe more vulnerable should …
23rd November 2011
The Turkish central bank (CBRT) left its benchmark policy rate on hold today as expected, but the crucial point is that interest rates have already been hiked, albeit via the backdoor. Tighter monetary conditions are another reason to expect the Turkish …
Despite the deepening crisis in the euro-zone, data released over the past month showed that growth accelerated in a number of countries in Emerging Europe in the third quarter of this year. Yet while Q3 GDP data were a welcome surprise, the monthly …
22nd November 2011
It appears that Hungary’s efforts to re-engage with the IMF have run into trouble sooner than even we had anticipated. While much still remains uncertain, the government’s decision to announce it was seeking IMF assistance without first discussing it with …
18th November 2011
News that Hungary will commence talks with the IMF on a “new type of cooperation” is clearly a positive step following the turmoil seen in local markets over the past couple of weeks. The forint has rallied by 2.5% against the euro since the announcement, …
17th November 2011
The relative stagnation in Russian oil production over the past few years has long been a concern for policymakers. However, it seems unlikely that the new, more favourable, tax regime for Russian oil companies will, as some have argued, lead to a marked …
16th November 2011
The raft of third quarter GDP data released today contained some positive surprises – notably stronger than expected growth in Hungary and Romania. But given the speed at which the euro-crisis has escalated in recent months, today’s data are already old …
15th November 2011
The deepening crisis in the euro-zone has led to a marked deterioration in the outlook for growth across Emerging Europe, but it will bring a range of different responses from policymakers in the region. At one extreme, in Hungary perennial concerns about …
14th November 2011
Data released today show that the Russian economy grew by a fraction under 5% y/y in the third quarter of this year, but leading indicators are already pointing to a slowdown in Q4. Meanwhile, the noose is tightening in Hungary following another failed …
The apparent resilience of the three Baltic economies continues to surprise. Data released over the past week show that Estonia grew by a solid 7.9% y/y in Q3, while growth edged up to 5.7% y/y in Latvia and to 6.6% y/y in Lithuania – all above consensus. …
11th November 2011
Fears are mounting over the exposure of Emerging Europe’s banks to the deepening crisis in the euro-zone. Our view remains unchanged from that which we put forward earlier this year: the big risk to the region’s banking sector is not that West European …
10th November 2011
With the Czech economy already slowing on the back of weaker growth in its key export markets, the case for policy stimulus is mounting. In the first instance, we expect a 25bp interest rate cut, probably before the end of this year, followed perhaps by …
9th November 2011
News that an IMF mission left Kiev late on Friday without approving the resumption of Ukraine’s $15bn programme has pushed the country a step closer to an external funding crisis. … IMF impasse pushes Ukraine closer to the …
7th November 2011
October’s manufacturing PMI data came in stronger than expected in most of Emerging Europe. Nevertheless, this does not hide the fact that hard data are weakening. On a quarterly basis, it appears that Turkish and Russian industry stagnated in Q3, while …
2nd November 2011
After nearly 20 years of negotiations, Russia now appears to be on the cusp of joining the WTO. But while in theory at least WTO membership could bring major economic benefits, in practice these will only be achieved if accession acts as a spur for …
31st October 2011
Financial markets in Emerging Europe have rebounded following this summer’s turmoil. Equity markets (Turkey aside) have rallied by around 8% or more this month, while the region’s currencies have appreciated by a similar amount against the euro. However, …
28th October 2011
Today’s move by the Central Bank of Turkey to suspend its 7-day repo auction and force banks to instead access finance via its overnight window amounts to a backdoor interest rate hike of as much as 675bps. … Turkish Central Bank tightens the …
27th October 2011
Russia’s Central Bank (CBR) is in a bind. While recent liquidity shortages in the banking sector and an improved outlook for inflation argue in favour of monetary easing, the weak ruble and persistent capital outflows will continue to keep the bar for …
26th October 2011
The rally in financial markets in Central Europe over the past few weeks is all the more notable since it has taken place against a backdrop of worsening economic data. We expect growth in Poland and the Czech Republic to slow sharply next year and now …
25th October 2011
Although financial markets have recovered a little this month, the activity data from the region has continued to soften. Yet in pretty much every country, policymakers have less scope to stimulate growth than they did during the 2008-09 recession. …
22nd October 2011
Although the Turkish Central Bank (CBRT) kept the benchmark repo rate on hold, today’s MPC meeting marked a clear shift in its stance. Policymakers are no longer in easing mood are moving instead towards preventing a disorderly adjustment in the lira. … …
21st October 2011
Emerging markets are not immune from the deepening debt crisis in the developed world, but most are well-placed to deal with the fallout. China faces a difficult structural transition of its own but, along with the rest of emerging Asia, has policy …
The raft of activity data for September released earlier today allow us to firm up our forecast for Russian growth in the third quarter. The good news is that the economy appears to have expanded at a decent annual pace of 4.5%-5.0%. But forward looking …
20th October 2011
Fears that the recent sell-off in Emerging Europe’s currencies might lead to a pick-up in inflation and put pressure on policymakers to raise interest rates are overstated. Nevertheless, weaker currencies will increase concerns over financial stability in …
19th October 2011
A hefty external financing requirement is casting a long cloud over the economic outlook for Ukraine. With limited access to private capital, the government will soon have no other option but to turn to the IMF. However, given the high political costs, we …
15th October 2011
While Turkey’s Medium-Term Programme (MTP) for 2012-14, unveiled today, contains some movement towards fiscal tightening, we think that it is a case of too little too late. The MTP is based on overly-optimistic assumptions and will not do enough to reduce …
14th October 2011
Russian markets have been hit hard during the recent financial market turmoil: the RTS equity index was down by 18% in September and the ruble lost 10% against the dollar. While the currency and equities now look oversold, we do not expect any rebound to …
