Filtered by Subscriptions: Emerging Europe Economics Use setting Emerging Europe Economics
The distribution of effective COVID-19 vaccines is likely to be relatively quick in Emerging Europe, paving the way for robust economic recoveries that will leave economies much closer to their pre-virus trend by end-2022 than most other EMs. Poland is …
1st December 2020
The decision by Turkey’s central bank to hike its one-week repo rate by 475bp, to 15.00%, and pledge to provide all funding through this facility appears to have done enough to convince investors that there really is a positive shift in policymaking …
19th November 2020
Hungary’s central bank left its key interest rates unchanged today but the recent appreciation of the forint and signs that disinflationary forces have picked up has given the central bank scope to reduce the interest rate on its one-week deposit back to …
17th November 2020
The recent tightening of virus containment measures across the region will push back the economic recovery well into 2021 and means that policy support will need to be stepped up before, as seems likely, an effective vaccine is distributed next year. But …
12th November 2020
President Erdogan’s latest comments suggest that the recent changes in Turkey’s economic management team may herald a shift back to orthodox policymaking. If these developments are backed up by a sharp interest rate hike at next week’s MPC meeting – we …
The sacking of Turkey’s central bank governor, as well as the (possible) departure of Finance Minister and President Erdogan’s son-in-law Berat Albayrak, has prompted a rally in local financial markets on expectations that breaks within the ruling AK …
9th November 2020
Poland’s central bank left its policy rate on hold at 0.10% at today’s MPC meeting and opted to reinforce its commitment to its asset purchase programme rather than announce new unconventional measures. These asset purchases are likely to work in tandem …
6th November 2020
The Czech National Bank (CNB) kept interest rates on hold at today’s MPC meeting and, despite its downbeat view on the economic outlook, gave no hint that monetary policy would be loosened further. We expect interest rates to remain on hold for some time …
5th November 2020
The Turkish lira has continued to fall sharply over the past couple of days and pressure is mounting on the central bank (CBRT) to deliver aggressive policy rate hikes at the MPC meeting later this month (if not before). But the political backdrop means …
3rd November 2020
A Biden presidency would probably result in a tougher US foreign policy stance against both Russia and Turkey, paving the way for a further deterioration in relations, an increased risk of tighter sanctions, and an acceleration in both countries’ recent …
30th October 2020
The Turkish lira has fallen sharply in recent days amid concerns about the central bank’s decision making, rising geopolitical tensions, and the backdrop of a dire external position. The experience from previous sell-offs is that most of the fall in the …
28th October 2020
The decision by Russia’s central bank to leave its policy rate at 4.25% today suggests that inflationary concerns are preventing further easing for now. But the communications reinforce our view that interest rates are likely to be cut next year to 3.50%; …
23rd October 2020
Turkey’s central bank (CBRT) left its benchmark one-week repo rate unchanged at 10.25% today but adjusted its other policy rates to give it more scope to tighten monetary conditions via the ‘corridor’. Political pressure is clearly making the CBRT …
22nd October 2020
The coronavirus crisis has already dealt a heavy blow to the Ukrainian economy and the risks to the outlook are growing: recent challenges to the independence of the central bank and anti-corruption institutions threaten to undermine the IMF deal agreed …
14th October 2020
The speed and scale of the rise in coronavirus infections across Emerging Europe has prompted a response from the authorities, but policymakers are likely to turn to much broader and tighter restrictions that affect more areas of economic activity. This …
12th October 2020
The conflict between Armenia and Azerbaijan in the disputed region of Nagorno-Karabakh has created yet another schism in Turkey’s relations with the US, the EU and Russia. It may only take a misstep in the conflict to trigger an escalation of geopolitical …
8th October 2020
The surge in coronavirus cases in Russia looks set to trigger tighter restrictions in the coming months. But we doubt that policymakers will re-introduce a full lockdown. After all, it would be politically infeasible to do so at the same time as they …
6th October 2020
A collapse in foreign firms’ reinvested earnings and a stronger recovery in goods exports than imports have caused Poland’s current account surplus to swell to record levels during the pandemic. While some of these factors are likely to fade, we think …
2nd October 2020
The Turkish central bank’s (CBRT’s) decision to hike its policy rates by 200bp today is a response to the recent lira weakness, and should help to restore the Bank’s battered credibility. The move gives the CBRT more room to tighten monetary conditions …
24th September 2020
The Turkish lira has continued to weaken in recent weeks and, with the response by policymakers likely to fail to placate investors, we now expect the currency to fall to as low as 9.25/$ by the end of next year. What’s more, the risks lie firmly towards …
23rd September 2020
The decision by Hungary’s central bank to leave its base rate on hold at 0.60% today highlights that the central bank is in a bind due to high inflation and concerns about the forint. Further interest rate cuts are likely to remain off the table and the …
22nd September 2020
The decision by Russia’s central bank to leave its policy rate on hold at 4.25% today is likely to mark a pause rather than an end to its easing cycle. The central bank will maintain its cautious approach to policy over the coming months as inflation …
18th September 2020
The Czech Republic has seen a renewed surge in virus cases in recent weeks and now has one of the worst outbreaks in Europe. While this poses a growing downside risk to the outlook, it has not changed our view that the Czech economic recovery is set to be …
14th September 2020
The rebound in Russian consumer spending since April has been supported by a more active fiscal policy stance than we had expected. Although the pace of growth will soften, spending is likely to remain strong and there’s a growing chance that the economy …
10th September 2020
The Russian ruble looks set to lose further ground over the coming months as geopolitical tensions and the threat of international sanctions ratchet up. We expect the ruble to drift towards 80/$ by year end, before rebounding to 72/$ (previously 65/$) by …
8th September 2020
New daily coronavirus cases have hit record highs across Central and Eastern Europe over the past month and authorities have responded by tightening restrictions at a local level. Health systems in Poland and the Czech Republic are well placed to deal …
2nd September 2020
The 11% q/q drop in GDP in Turkey in Q2 was smaller than we had expected and we now forecast the economy to slump by 3% this year (previously 5.8%). But the recovery over the coming quarters will be held back by weakness in the tourism sector as well as …
1st September 2020
Turkey’s central bank kept its key policy interest rates on hold today and, while the accompanying statement acknowledged growing upside risks to inflation, it looks like that the focus will remain on tightening monetary conditions via the use of the …
20th August 2020
The escalation of protests in Belarus and calls for EU sanctions pose a major threat to political stability in the country and the economic outlook, but a downturn in Belarus’ economy would have limited fallout for other countries. The key question is how …
17th August 2020
Turkey’s banks are more vulnerable now to a sell-off in the lira and a tightening of external financing conditions than they were in the run-up to the 2018 currency crisis. The Turkish lira has stabilised after the central bank took steps to tighten …
12th August 2020
Turkey’s central bank (CBRT) has burned through its FX reserves to defend the lira this year, but the CBRT’s firepower is severely depleted and reserves are now so dangerously low that monetary conditions will need to be tightened by much more to prevent …
11th August 2020
If strains in Turkey’s balance of payments fail to ease, the central bank will probably tighten monetary conditions more aggressively within the interest rate “corridor”. But use of the corridor alone would not allow real interest rates to return to …
10th August 2020
Turkey’s current account deficit has widened to levels not seen since 2018, which can partly be explained by a slump in tourism receipts. While this should start to reverse over the rest of this year, Turkey’s large external financing needs will keep the …
6th August 2020
Today’s depreciation of the Turkish lira marks the first significant departure from the de facto peg that has been in place over the past month and, if tensions with the EU continue to escalate, sharper falls lie in store. These could ultimately force the …
28th July 2020
Russia’s central bank cut its policy rate by 25bp, to 4.25%, today and continued to provide signals that further easing lies in store. But the communications suggest that the pace of easing will slow. We maintain our forecast for the policy rate to be …
24th July 2020
Turkey’s central bank kept interest rates on hold today and it’s clear from the accompanying statement that inflation concerns are preventing further easing. We think that rates will now be left on hold for the next couple of years. But given high rates …
23rd July 2020
Turkey’s credit boom that started towards the end of last year has been turbocharged in recent months and this should provide some welcome support to the economy as it emerges from the coronavirus crisis. That said, the nature of the lending reinforces …
9th July 2020
Borders are slowly re-opening across Emerging Europe, but international tourists are unlikely to return to the region in significant numbers for the key summer season. Romania and Russia are the least vulnerable and efforts to promote domestic tourism …
7th July 2020
Poland’s central bank appears to have become concerned about the strength of the zloty recently and the negative impact this could have on the pace of the economic recovery, suggesting that it is likely do more to loosen policy this year. We think that …
2nd July 2020
Turkey’s central bank unexpectedly left interest rates on hold today and it’s difficult to see how economic conditions will change in such a way over the coming months to justify renewed easing. We now expect rates to be left on hold over the rest of this …
25th June 2020
Hungary’s central bank (MNB) unexpectedly cut its base rate from 0.90% to 0.75% at today’s monetary policy meeting, and we now think another cut is likely in the second half of this year. With the economic recovery likely to fall short of the central …
23rd June 2020
Russia’s central bank (CBR) didn’t disappoint at today’s meeting, cutting the key policy rate by 100bp to a new post-Soviet low of 4.50%. With disinflationary forces proving stronger than expected and financial markets stabilising, the accompanying …
19th June 2020
The effects of lockdowns have been felt unevenly across the region, with Romania and Turkey suffering among the largest falls in both retail sales and industrial production, while activity in Latvia and Ukraine has held up better. High-frequency data …
16th June 2020
The early signs are that activity is recovering quickly in Poland as lockdown measures are lifted. Provided that the virus is contained, we think that Poland will experience the smallest contraction in GDP across Europe this year. Large policy stimulus …
9th June 2020
Turkey’s public finances remain in good shape compared with most other EMs but they have deteriorated in recent years and are no longer the pillar of strength that they once were. The debt-to-GDP ratio will continue to rise and, as investors demand a …
5th June 2020
Turkey’s central bank stepped up its monetary support for the economy with a 50bp cut in interest rates today and recent announcements of financial support from Qatar and Japan probably tips the balance in favour of further easing at June’s meeting. A …
21st May 2020
A deep dive into Russia’s banking system provides comfort that, while there are pockets of vulnerability beneath the surface, the economy is unlikely to experience a financial crisis like it did in 2008/09 and 2014/15. Even so, the post-coronavirus world …
20th May 2020
The Czech central bank delivered a larger-than-expected interest rate cut at today’s MPC meeting but also disappointed those that had expected some unconventional measures to be announced to support the economy. Policymakers’ cautiousness and conservatism …
7th May 2020
A worrying divergence is emerging in the policy response across the region. Policymakers in Central Europe imposed lockdown measures early which have succeeded in containing the outbreak. And the scale of economic policy support will bolster recoveries as …
5th May 2020
Hungary’s central bank didn’t disappoint at today’s MPC meeting in announcing its bond purchase programme and it’s clear that policymakers have shifted their attention from keeping short-term rates low to pushing down long-term rates. But unlike bond …
28th April 2020