Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
Turkey’s balance of payments problems Strains in Turkey’s balance of payments persist and recent developments have done little to alter our view that the risk of another currency crisis is rising. Data this week showed that the current account posted a …
15th May 2020
President Putin faces one of his sternest tests The failure of the Russian authorities to contain the virus outbreak and the lack of urgency with which policymakers have stepped up fiscal support has made us increasingly concerned about a prolonged …
7th May 2020
Turkey’s lira defence far from over Figures released this week highlighted the hit to Turkey’s balance of payments from steps to contain the coronavirus and, while the lira broke through 7/$ today, efforts to defend the currency are not over yet. Trade …
1st May 2020
Turkey turns to import compression to protect lira Turkish policymakers’ efforts to prevent the lira from slipping through 7/$ will prove futile and, with the chances of an IMF deal slim, the government has turned to import compression to counter balance …
24th April 2020
Pressure builds on Turkish lira The Turkish lira was resilient in March’s market sell-off but it’s been the ugly duckling of EM currencies this month as fears grow over the country’s coronavirus outbreak and poor external position. Whereas most EM …
17th April 2020
Coronavirus developments: the good and the bad Governments in parts of the region have had some success in slowing the spread of the virus, but there is clear evidence that Russia and Turkey are struggling to contain outbreaks. In Turkey, cases topped …
9th April 2020
Hungary’s Orbán granted unlimited power The Hungarian parliament’s decision to allow Prime Minister Viktor Orbán to rule by decree indefinitely has caused uproar among EU officials. Governments globally have assumed emergency powers to fight the …
3rd April 2020
CEE central banks expand their toolkit As the number of coronavirus cases has increased and the damage to the region’s economies has intensified, the policy response across Central and Eastern Europe (CEE) has become more aggressive. Central banks in …
27th March 2020
Outlook goes from bad to worse The downside risks to the global economy have now become reality and the effects of the coronavirus will cause output to fall sharply in Q2 and GDP across the region will contract this year. The number of coronavirus cases …
20th March 2020
Russia: oil collapse a headwind, but not disaster The outlook for Emerging Europe has taken a considerable turn for the worse over the past week. On the face of it at least, developments seem most adverse for Russia. The shift in oil policy in Saudi …
13th March 2020
Policy support to be stepped up as virus spreads The coronavirus outbreak has prompted a policy response across much of the world, but policymakers in Emerging Europe have only gone as far as acknowledging the risks. We suspect that support will be …
6th March 2020
Syria tensions hit Russian & Turkish markets Concerns about the coronavirus outbreak have hit global financial markets, but assets in Turkey and Russia have taken a further leg down due to tensions between the two arising from the conflict in Syria. An …
28th February 2020
Turkish gov’t seeks more control over local banks The Turkish government’s plans to transfer the opposition party’s stake in a major bank to the Treasury adds to the evidence that it is trying to gain more leverage over the banking sector. But there are …
21st February 2020
Inflation baring its fangs Inflation rose above the upper level of central banks’ targets in Central Europe in January for the first time in over seven years. Inflation jumped in Hungary (4.7%), Poland (4.3%) and the Czech Republic (3.6%), largely …
14th February 2020
Romania moves one step closer to snap elections Romania’s three-month old government collapsed this week following its defeat in a no confidence vote brought by the opposition. This increases the chance of early elections this year, bringing forward …
7th February 2020
CBRT’s output gap assumptions seem implausible In its Inflation Report released this week, Turkey’s central bank (CBRT) stuck to its forecast for inflation to fall back in 2020-21, but this rests on the farfetched assumption that a negative output gap …
31st January 2020
CBRT’s inflation forecasts to be proven wrong Comments from Turkey’s central bank (CBRT) governor in Davos this week suggest that further rate cuts lie in store. This is premised on the view that inflation will fall back, which is likely to prove …
24th January 2020
Russia: the taxman cometh (but may giveth) Russia has been gripped by political turbulence this week after President Putin announced a series of proposed constitutional amendments, which are expected to allow him to wield power once his presidential term …
17th January 2020
Risks still prominent in Turkey’s banks Turkey’s financial markets have rebounded in recent days, partly because fears of a US-Iran war have eased but also because local banks have sounded more bullish on their own performance this year. But long-standing …
10th January 2020
Russian inflation dips, paving the way for rate cut The drop in Russian inflation in December, combined with comments from the central bank governor, support our view that there will be at least one more interest rate cut in the current easing cycle. …
3rd January 2020
Weak lira to (eventually) force rate hikes in Turkey The Turkish lira has been one of the worst performing EM currencies this month and this probably sets the scene for next year. This is a key reason why we think that the central bank will ultimately …
20th December 2019
Ukraine: hard work begins after securing IMF deal Ukraine is on the cusp of securing a new IMF bailout, but history suggests that the government will struggle to meet the Fund’s demands, which could put the recent rally in the bond market into reverse. On …
13th December 2019
Old habits in Turkey Data published this week provided familiar signs that growth in Turkey is increasingly unbalanced. The Q3 GDP figures published on Monday showing growth of 0.4% q/q caused some to highlight that the economy is slowing (growth in Q1 …
6th December 2019
Turkey: interventionist policy stores up problems Interventionalist policymaking in Turkey has come back on the radar this week. This is likely to lead to a misallocation of resources and adds to the reasons to think that the country’s next crisis could …
29th November 2019
Russia: boost from fiscal policy seems optimistic Signs that Russia’s government is ramping up spending have raised hopes that economic growth will strengthen further in the coming quarters. But we don’t think that it will provide the large boost that …
22nd November 2019
Turkey current account set to deteriorate Turkey’s current account has been in surplus for three consecutive months now, but the government’s efforts to speed up the recovery will probably cause the external position to deteriorate again soon. The surplus …
15th November 2019
Mixed performance across the region The batch of Q3 GDP data to be released next week are likely to show that Russia’s economy continued to struggle while Central and Eastern Europe held up well, particularly given the context of sluggish growth in the …
8th November 2019
Nord Stream 2 gets the go ahead The Danish government’s decision to approve the Nord Stream 2 gas pipeline this week is widely seen as a victory for Russia. The project may be completed in the coming months, allowing Russia to ship gas directly to Europe …
1st November 2019
Rate cuts & dovish noises The raft of interest rate cuts and dovish noises out of central banks this week suggest that monetary policy is likely to remain loose or be loosened further across most of the region over the coming quarters. That said, we think …
25th October 2019
The five-day ceasefire in Syria agreed by Turkey and the US yesterday has prompted a rally in Turkish markets, but the calm could prove temporary and the charges brought against Halkbank this week underline the vulnerability of the banking sector. In …
18th October 2019
Turkish markets to suffer as risk of sanctions grows The threat of sanctions against Turkey is growing and, given the context of the country’s large external debts, the fallout for local financial markets could prove to be more severe than that the …
11th October 2019
Poland: Swiss-franc loans put banks in the spotlight The ruling by the European Court of Justice (ECJ) that Polish households can potentially convert their Swiss franc mortgages into zloty could result in bank losses but should not have a major macro …
4th October 2019
Three central banks surprised the markets this week with more hawkish-than-expected communications. The Turkish central bank is likely to cut rates further, but above-target inflation will prevent monetary easing in Hungary and the Czech Republic. …
27th September 2019
Turkey’s banks back in the spotlight The Turkish banking regulator’s decision to force banks to reclassify TRY46bn of loans as non-performing will raise concerns about the health of banks’ loans books, but the major risks in the banking sector stem from …
20th September 2019
Poland minimum wage set to rise sharply Sharp hikes in the minimum wage proposed by Poland’s ruling Law and Justice party (PiS) ahead of October’s elections have raised concern about the inflation outlook, but we think that some of the worst fears are …
13th September 2019
Too quick to become optimistic on Ukraine? Ukraine’s President Volodymr Zelensky has hit the ground running in his bid to push key reforms through the Rada. Markets have taken these developments, as well as the strong Q2 GDP figures, positively but we …
6th September 2019
No-deal Brexit risks come back into play The increasing likelihood of a no-deal Brexit is coming at a time when Central Europe is starting to be affected by weakness in the euro-zone and a more general slowdown in the global economy. As a result, the …
30th August 2019
Turkish central bank takes aim at bank lending The fall in the Turkish lira this week amid concerns about the central bank’s shift towards monetary easing strengthens our view that, while interest rates will be cut aggressively in the near term, the MPC …
23rd August 2019
Russia: slow and bumpy recovery ahead Russia’s economy staged a recovery in Q2, but the early evidence suggests that the economy failed to gather momentum at the start of Q3. The preliminary Q2 GDP figure released on Monday showed that the economy …
16th August 2019
Industry’s outperformance coming to an end June’s terrible industrial production data for Central Europe provided the first clear sign that weakness in the euro-zone is dragging manufacturing activity in the region down. After rising strongly for most of …
9th August 2019
CBRT too sanguine on inflation risks The Turkish central bank’s optimistic inflation forecasts add weight to our view that it is likely to go too far with monetary easing and will ultimately have to reverse course further down the line. In its latest …
2nd August 2019
Turkish central bank playing with fire Turkish financial markets took Thursday’s larger-than-expected interest rate cut in their stride but we don’t think that this resilience will last. Investors seems to be coming round to our view that the central bank …
26th July 2019
Erdogan: rates to be cut in a “serious manner” Comments this week from Turkey’s new central bank governor and President Erdogan suggest that an interest rate cut next Thursday will be followed by further aggressive easing in the coming months. The case …
19th July 2019
Downside risks to Turkey’s outlook mount Developments in Turkey over the past week highlight that all levers of economic policy have effectively been centralised in the hands of one man – President Recep Tayyip Erdogan. The reaction in financial markets …
12th July 2019
Oil sector drag won’t prevent Russian recovery The rollover of OPEC’s oil production quotas for nine more months will be an unhelpful headwind for Russia’s economy, but it is unlikely to prevent growth from picking up in the second half of 2019. Russian …
5th July 2019
Turkey’s fiscal credibility under scrutiny Investors in Turkey will be nervously waiting to see if President Erdogan can persuade President Trump at the G20 to approve Turkey’s purchase of a Russian missile defence system, lifting the threat of sanctions …
28th June 2019