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The outlook for Turkey remains amongst the best in the region, but policymakers at the central bank (CBRT) are still in no mood to raise interest rates. … Central Bank of Turkey turns even more …
26th October 2010
In light of the recent upward revision to our near-term profile for oil prices, we have pushed up our Russian growth and inflation forecasts for 2011. But the economy remains vulnerable to the fall in prices that we expect late next year, and there is …
21st October 2010
The outlook for Poland remains amongst the best in the region, and we now expect the economy to expand by 3% next year (from 2.5% before). But with further steps needed to tackle the large structural fiscal deficit, growth is likely to remain below its …
20th October 2010
Our latest ‘Heat Map’ suggests that pressures facing the region’s banks have continued to ease in recent months. But while the worst of the crisis is now behind us, familiar vulnerabilities persist. At best, this will be a credit-less recovery. More …
19th October 2010
It has been a long time coming, but policymakers in parts of the region are gearing up to begin tightening monetary policy. The Central Bank of Turkey accelerated its so-called ‘exit strategy’ from last year’s stimulus measures earlier this month, while …
18th October 2010
The Hungarian government last night announced a fresh set of fiscal austerity measures, which should allow it to at least come close to meeting next year’s budget deficit target of 3% of GDP. But its efforts remain reliant on temporary measures and a …
14th October 2010
Last month’s pick-up in inflation in the Czech Republic is likely to give further ammunition to the hawks on the National Bank’s (CNB’s) policymaking Board. But core price pressures remain remarkably subdued, and we still think that interest rates could …
11th October 2010
Russian banks have become more willing to lend in recent months. Much still depends on oil prices, but a strengthening banking sector raises the chances that the rapid expansion of the monetary base over the past year feeds into a pick-up in consumer and …
Fears that a rapid influx of capital into emerging markets may sow the seeds of the next bubble are starting to build. For the bulk of Central & Eastern Europe (CEE), however, the biggest risk is that capital inflows over the next couple of years are too …
8th October 2010
The overall state of the public finances in Slovakia is in better shape than in most of Emerging Europe. Even so, a combination of tighter fiscal policy and, more importantly, a fading recovery in Germany, means that GDP growth is set to slow sharply in …
6th October 2010
After recent gains in Slovakia and the Czech Republic, centre-right parties had another strong showing in elections in Hungary and Latvia this weekend. But while Latvia’s ruling coalition has already displayed a strong commitment to fiscal reform, …
4th October 2010
September’s manufacturing PMIs brought further evidence that Poland is leading the recovery in Central Europe. Elsewhere, however, the industrial sector is losing steam. … Poland still leading the …
1st October 2010
Growth in some economies in Emerging Europe, not least Turkey, is starting to look impressive. But underlying inflation pressures remain relatively benign, and concerns over the durability of the global recovery mean that policymakers are in no rush to …
30th September 2010
The Central Bank of Russia (CBR) kept its key interest rates unchanged earlier today and issued a dovish accompanying statement. But in reality official interest rates have little bearing on market rates, and therefore lending and borrowing rates in the …
29th September 2010
The Czech National Bank (CNB) kept interest rates unchanged at 0.75% earlier today, as expected. But the news that one Board member voted for a rate hike will lead to much debate over the future pace of monetary tightening. We remain resolutely dovish. … …
23rd September 2010
Aside from a recent drought-related rise in food prices, our forecast that Russian inflation would fall sharply this year has played out as we expected. But while underlying price pressures should remain modest over the next year or so, it is far too soon …
22nd September 2010
Growth in some economies in the region is starting to look impressive but underlying inflation pressures remain benign and concerns over the durability of the global recovery will keep policymakers from tightening monetary policy quickly. … Still in no …
20th September 2010
Some economies in Emerging Europe should grow at a decent pace over the next year or so, but most are facing a long haul back to health and the likelihood of renewed tensions within the eurozone represents a major risk to the recovery across the entire …
17th September 2010
Today’s slide in the ruble is all the more surprising given that oil prices have been rising over the past few weeks. With oil prices still likely to fall over the next year, we are sticking to our non-consensus view that the Russian currency will weaken …
16th September 2010
After the positive result in Sunday’s referendum on constitutional reform, Turkish markets received a further piece of good news this morning in the form of stronger than expected Q2 GDP data. In response, we have nudged up our growth forecast for this …
14th September 2010
The positive result in yesterday’s referendum on reforms to the Turkish constitution is good news for two reasons. First, it shows that support for the present AKP government is still high and, as such, reduces the likelihood of a fiscal splurge in the …
13th September 2010
A number of events over the course of this week have thrown Russia’s reform agenda and the 2012 presidential elections back into the spotlight. It’s still far too early to conclude whether Mr. Putin or Mr. Medvedev will prevail in 2012. But while the …
10th September 2010
The past week has brought further evidence that Hungary’s government is starting to pay the price for its bellicose talk. Bond yields are rising and the forint has failed to rally in recent weeks, despite an improvement in global risk appetite. While it …
9th September 2010
This report is only available as a PDF. Click to download. … Central Europe: the fiscal squeeze is here …
8th September 2010
July’s slump in Czech retail sales was not a huge surprise, given that June’s surge was built on flimsy foundations. By contrast, the slowdown in industrial production growth, while exacerbated by calendar effects, is more of a concern and contradicts …
6th September 2010
Yesterday’s cabinet reshuffle in Romania does not present any immediate risk to the IMF-led loan programme. But it underlines the tense political situation and the deep divisions in parliament over the government’s austerity measures. In any case, the …
3rd September 2010
The Bulgarian economy has been slower to recover than many of its peers in Emerging Europe, and it is unlikely to surge ahead anytime soon. We still think that GDP is on course to contract again this year, and that the overall pace of recovery will be …
2nd September 2010
The manufacturing PMIs remained consistent with rising industrial production in every country last month. But there were signs of mixed fortunes, and given the slowdown expected in key export markets, we expect manufacturers in Emerging Europe to come …
1st September 2010
Data released yesterday show that the Polish economy grew by a stronger than expected 3.5% y/y in Q2 (up from 3.0% y/y in Q1). We have since raised our GDP forecast to 3% this year, from 2.5% previously. But with further fiscal austerity measures likely …
31st August 2010
The Turkish bond market has shrugged off the news that a much vaunted fiscal rule will not now be implemented until 2012 at the earliest. This may be justified since, on its own, a rules based framework provides no guarantee of budget responsibility. But …
26th August 2010
Most economies in Emerging Europe posted positive quarterly growth in Q2 and some countries, notably Russia and Turkey, remain on track for an impressive rebound this year. However, a number of factors suggest that Q2 will mark the high point for growth …
25th August 2010
The surge in Czech retail sales over the past couple of months is not as good as it seems at first sight. In particular, the rapid rise in sales volumes appears to owe much to heavy discounting by vehicle sellers. … More to the surge in Czech retail sales …
24th August 2010
Emerging Europe Central Bank Watch 1 Aug. 2010 EMERGING EUROPE CENTRAL BANK WATCH Economies in Emerging Europe are more vulnerable than those in the West to a spike in wheat prices following recent events in Russia. After all, food accounts for a much …
20th August 2010
July’s ‘Economic & Social Indicators Report’, released earlier this afternoon, contains the first signs that this summer’s droughts and associated wildfires have begun to hit activity in some sectors of the Russian economy. But for now at least, there is …
18th August 2010
History suggests that the economies of Central Europe (Hungary, Poland and the Czech Republic; the CE3) have in the past had to grow by between 3.0%-3.5% in order to create jobs. But the region’s economies are unlikely to expand at this pace for at least …
The raft of preliminary Q2 GDP releases from Emerging Europe this morning paint a broadly positive picture. But given the significant headwinds still facing the recovery, this may be as good as it gets. … The recovery gains pace, but is still likely to …
13th August 2010
In light of stronger than expected Q2 GDP data from the Baltic States over the past few weeks, we have raised our GDP growth forecasts for this year and next. But with domestic demand set to remain under intense pressure, the region still faces a long …
12th August 2010
The Russian economy expanded by a solid 5.2% y/y in Q2 (up from 2.9% y/y in Q1). But given the impact of the current drought and, more notably, our view that oil prices will fall back later this year and stay there, we suspect that this will mark the …
11th August 2010
Turkey’s current account deficit was smaller than expected in June, but it widened as a share of GDP over Q2 as a whole. What’s more, while the quantity of financing does not appear to be a concern at present, the quality of financing has deteriorated in …
The Czech National Bank (CNB) today kept interest rates on hold at 0.75% for the second consecutive meeting. We are sticking to our view that rates will remain at record lows until 2012. … Czech Rep: rate hikes remain a distant …
5th August 2010
Turkey’s medium-term growth prospects are just about the best in Emerging Europe. But realising the economy’s full potential will require raising domestic savings. If the authorities can achieve this then GDP could grow by 7% per annum over the next 25 …
4th August 2010
Concerns that the current drought in Russia will trigger a surge in food prices and a wider pick-up in inflation are increasing. However, a number of factors suggest that a repeat of the food-driven surge in inflation seen in late-2007 and early-2008 is …
3rd August 2010
Manufacturing PMIs fell in every country with the exception of Russia last month, but remain consistent with double-digit annual increases in industrial production. The key question is whether this pace of expansion can be sustained against a backdrop of …
2nd August 2010
With the notable exception of Hungary, most countries in Emerging Europe have now started to step up efforts at fiscal consolidation. In particular, the new governments in Slovakia and the Czech Republic both came to power advocating austerity measures, …
30th July 2010
Details of Russia’s plans to raise up to $30bn through the sale of state assets have trickled out over the past day or so. The proposals are good news at the margin, although the renewed emphasis on privatisation primarily reflects the need to reduce …
29th July 2010
Turkey’s Q3 Inflation Report confirms that policymakers remain resolutely dovish and relaxed about the inflation outlook. We now think that interest rates will stay on hold until 2011. Furthermore, even when rates do start to rise, the pace of tightening …
27th July 2010
In stark contrast to recent developments in Hungary, the fiscal cutbacks announced by the Romanian government have so far helped to keep its IMF-led loan deal alive. But these will come at a cost. We now expect the economy to contract by 2.5% this year, …
26th July 2010
The recovery in manufacturing across Emerging Europe has for the most part been pretty impressive. With the notable exceptions of Romania and Bulgaria, industrial output is now growing at doubledigit annual rates in nearly every country. But while there …
Hungary can probably survive without a new IMF/EU programme for the remainder of this year. But we suspect it will eventually be forced to re-engage with the Fund either later this year or early in 2011 – and on much stricter terms. In the meantime, …
23rd July 2010
Recent data suggest that the economy is back on track for a robust rebound this year. Nonetheless, we suspect that Q2 will mark the high point for annual GDP growth and the pace of recovery is likely to fade in the second half of the year and into 2011. … …
20th July 2010
