Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
As the dust settles on last weekend’s parliamentary elections, the immediate priority for policymakers will be to cool an economy that is displaying increasing signs of overheating. This will require tightening both fiscal and monetary policy. But while …
15th June 2011
Victory in the elections held in Turkey yesterday ensures an unprecedented third term for the Justice and Development Party (AKP). But the positive market reaction, including a stockmarket rally and strengthening exchange rate, could be short-lived as …
14th June 2011
The statement following today’s Polish interest rate hike was more dovish than in recent months, highlighting the risks to the recovery and the hope that front-loading monetary tightening will support a soft landing. With global commodity prices set to …
8th June 2011
The past few months have brought further signs that, after a torrid couple of years, the region’s banking sector is starting to find its feet. But credit growth is likely to remain subdued across most of the region for the foreseeable future, providing a …
6th June 2011
Today’s PMI data for the Czech Republic, Poland, Russia and Turkey provide further evidence of a slowing recovery in Emerging Europe. Much of the buoyancy of manufacturing output has been driven by export demand, especially from the EU. With the euro-zone …
1st June 2011
Q1 GDP data from Poland show that the economy got off to a solid start in 2011. The twin budget and current surpluses are an ongoing concern. But the country is set to retain its position at the front of the pack for now, with GDP likely to grow in line …
31st May 2011
The raft of Q1 GDP data released earlier this month confirmed that the region’s economies are still expanding, but that the pace of growth remains disappointing, particularly given the depth of the recession in 2009. Romania surprised on the upside, …
26th May 2011
The spike in inflation that has dominated the headlines in recent months should be short-lived. In most countries, rising inflation has been driven by higher food and energy inflation, which in turn has been the result of the spike in global commodity …
25th May 2011
Inflation is causing serious headaches for policymakers across Emerging Europe. With the exception of the Czech Republic, headline CPI ticked up everywhere last month, and is now well above target in Hungary, Poland and Romania. … Inflation fears to fade …
20th May 2011
Media reports suggest that the Hungarian government is close to unveiling a draft plan aimed at dealing once and for all with the legacy of the FX-debt boom that brought the country’s banking sector to its knees in late-2008. But the reality is that the …
19th May 2011
Today’s decision by the National Bank of Hungary (NBH) to keep interest rates on hold at 6.00% for the fourth consecutive meeting underlines how inflation fears have slipped down policymakers’ list of concerns. The market has scaled back its tightening …
16th May 2011
The fact that Russian growth slowed in Q1 despite the surge in oil prices suggests that all is not well in Emerging Europe’s largest economy. Growth should accelerate over the second half of the year, but the signs that investment has collapsed casts a …
The flurry of Q1 GDP data released today suggests that the recovery in Emerging Europe is progressing, although the pace of growth is a touch disappointing given the recent strong expansion in key exports markets (notably, Germany). With external …
13th May 2011
The National Bank of Poland’s (NBP) surprise decision to raise interest rates by 25bps to 4.25% today does not change the bigger picture that the pace of tightening currently priced into the forward market looks too aggressive. … Surprise Polish rate hike …
11th May 2011
Today’s industrial production data (for Bulgaria, the Czech Republic, Romania, Slovakia and Turkey) were weaker than expected, and reflect our concern that the export-led recovery may be starting to falter. As external demand slows this year, we expect …
9th May 2011
In contrast to the prevailing consensus, we believe that there is compelling evidence to suggest that the preservation of sovereign currencies – as opposed to euro-adoption – offers the best route to prosperity for Emerging Europe. Accordingly, while some …
5th May 2011
Today’s release of Polish PMI data for April, together with a similar release from the Czech Republic earlier this week, suggests that the industrial rebound in Central Europe remains in pretty good shape. Nonetheless, the marked falls seen in the Russian …
4th May 2011
The pick-up in Turkish inflation to 4.3% y/y last month is only the thin end of the wedge and we expect it to rise to over 7% by Q1 2012. Against the backdrop of yet more bad news on the trade deficit, evidence of overheating – and the threat of a hard …
3rd May 2011
Each successive stage of the euro-zone crisis has had a progressively smaller impact on financial markets in Emerging Europe, to the extent that this month’s bailout of Portugal barely registered on the radar of investors in the region. … Markets shrug …
26th April 2011
Today’s decision by the Central Bank of Turkey to keep interest rates on hold at 6.25% but raise bank reserve requirements on short-term lira and FX deposits is a clear signal that there will be no immediate shift away from the Bank’s ‘unorthodox’ …
21st April 2011
Higher oil prices have not yet fed through to a pick-up in the Russian economy. In fact, if anything the annual rate of GDP growth appears to have slowed in Q1. … Russia: No sign of a boost from higher oil prices... …
20th April 2011
As expected, Hungarian policymakers kept interest rates unchanged at 6.00% for the third consecutive meeting today. As in the Czech Republic, we now expect rates to remain on hold into 2012. However, Poland is the odd-one-out in Central Europe. March’s …
18th April 2011
The appointment of Erdem Basci as the new Governor of the Central Bank of Turkey will no doubt lead to concerns about increased government influence over monetary policy. While these concerns are perhaps understandable, we think that they are probably …
14th April 2011
Today’s inflation data from Bulgaria were not as bad as the market had feared. Even so, prices are still rising at their fastest pace for two years and, in the context of the currency board arrangement with the euro, will mark a further decline in the …
12th April 2011
We doubt that the bailout of Portugal will draw a line under the problems in the euro-zone’s peripheral economies and fear instead that it may mark the start of a new, more dangerous phase of the crisis. Accordingly, while financial markets in Emerging …
The near-term outlook for the Polish economy remains amongst the strongest in the region, with GDP growth set to remain close to its potential rate of around 4% for the next couple of years. But the real challenge for the government in the near term is to …
11th April 2011
Romania’s recovery will be two-speed, with industrial output boosted by foreign demand (especially from Germany) while domestic demand will remain sluggish. We expect the central bank to keep rates on hold this year and instead expect it to curb imported …
8th April 2011
The accompanying statement to today’s Polish MPC meeting was more hawkish than we had expected but that doesn’t necessarily mean that interest rates have much further to rise. If, as we expect, core euro-zone economies start to lose steam over the coming …
5th April 2011
March’s PMI data from across Emerging Europe were a mixed bag, but the bigger picture is that the region’s manufacturing recovery remains in good shape. Industry will remain the principal engine of growth in the near term. … Industry remains in good …
1st April 2011
Another month, another set of data showing bumper industrial production growth. Turkish industry is leading the way and is now growing by close to 20% y/y. But most other countries in the region are experiencing double-digit industrial production growth …
31st March 2011
In some respects, Turkish fourth quarter GDP data simply confirm what we already knew – the economy picked up pace towards the end of last year and ended 2010 on a high note. But the sheer pace of growth in Q4, and its increasingly unbalanced nature, adds …
The likelihood that the ECB will raise interest rates next month increases the chances that central banks in Emerging Europe will tighten monetary policy too. But the bigger point remains unchanged – monetary policy in most of the region will remain …
29th March 2011
The recent spat over an apparent ‘black hole’ in the Polish/German trade balance ignores the fact that inconsistencies between bilateral trade balances are fairly common. But the large ‘net errors and omissions’ component of Poland’s balance of payments …
28th March 2011
Today’s decision by the Central Bank of Russia (CBR) to keep its key interest rates unchanged suggests that inflation concerns have slipped down the government’s list of priorities over the past few weeks. But the decision to hike reserve requirements …
25th March 2011
The recovery in Emerging Europe remains broadly on track. GDP growth rates are likely to prove solid, if not spectacular, in a number of countries over the coming years with Turkey, Poland and, in the near term at least, Russia leading the way. …
24th March 2011
Today’s decision by the Central Bank of Turkey to raise bank reserve requirements by a massive 400bp should help to calm market fears that it has fallen behind the curve in the face of booming domestic demand. We expect further increases in reserve …
23rd March 2011
Slower-than-expected inflation in Poland last month means that an increase in interest rates at the Monetary Council’s April meeting is not quite the done deal that the markets seem to expect. What’s more, the relative weakness of underlying price …
15th March 2011
The likelihood that the ECB will raise interest rates next month increases the chances that central banks in Emerging Europe will tighten monetary policy too. But even so, we do not expect to see a stampede to raise interest rates. Indeed, of all the …
14th March 2011
If the recent spike in oil prices is sustained, it could add as much as 1.5% to real GDP growth in Russia this year. But while higher commodity prices may boost growth in the near term, they work against the structural reforms that are needed to raise …
9th March 2011
The National Bank of Poland left interest rates unchanged at 3.75% this lunchtime, as we expected. It was probably a close call and the market is still pricing in further significant hikes in the benchmark rate over the coming quarters. But Q4 GDP data …
2nd March 2011
The long-awaited ‘structural revamp’ of the public finances that was unveiled by Hungary’s government earlier today was big on rhetoric but short on detail. The bottom line is that the government’s plans to reduce debt and the deficit still appear overly …
1st March 2011
February’s PMI data from across Emerging Europe show that the region’s industrial recovery is still going strong. Indeed, our regional PMI index is now at its highest level on record. Industry will remain the main driver of growth in the near term. … …
Q4 GDP data from across Emerging Europe show that the region’s recovery continued in the final months of last year. Of the economies that have reported data so far, all posted positive quarterly growth in Q4 and growth accelerated on an annual basis in …
28th February 2011
Today’s decision by the Central Bank of Russia (CBR) to increase both bank reserve requirements and its key interest rates by 25bps is a further sign that rising inflation is moving up the government’s list of policy priorities. Further hikes seem all but …
25th February 2011
Growing concerns over unrest in the Middle East have sparked a sell-off in equity markets across the world over the past week, and Turkish stocks have been hit harder than most. Yet trade and investment flows with the Middle East are not as large as many …
24th February 2011
Today’s data from Poland were a bit of a disappointment and leave next week’s interest rate decision finely balanced. Meanwhile, recent comments from MPC members have been as contradictory as ever. It’s a close call, but the chances of another hike next …
23rd February 2011
The National Bank of Hungary kept rates unchanged at 6% earlier today, as expected, bringing to an end a short-lived tightening cycle that had spanned three months. Inflation is likely to slow over the course of this year and could fall back to target by …
21st February 2011
January’s activity data from Russia suggest that the economy made a dire start to 2011. Of course, it is unwise to read too much into one month’s data. What’s more, with oil prices currently over $100pb, growth should begin to pick up in the coming …
18th February 2011
The Central Bank of Turkey kept interest rates on hold at 6.25% earlier this month and is now in ‘wait and see’ mode to evaluate the impact of its unconventional experiment with monetary policy (cutting interest rates while raising banks’ reserve …
17th February 2011
Today’s decision to keep interest rates unchanged at 6.25% suggests that the Central Bank of Turkey (CBRT) has reached the end of its rate-cutting cycle. While policymakers’ unconventional policy response (cutting interest rates while raising banks’ …
15th February 2011
