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Recovery strengthens Poland’s stronger-than-expected activity data for February suggest that loose fiscal policy and continued fast wage growth helped the economy to recover at the start of this year. We maintain our above-consensus GDP growth forecast of …
21st March 2024
We hosted an online briefing to discuss EM financial risks in more detail. Watch the recording here . Our risk indicators are presented as an interactive EM dashboard on our website here . The past few years have sharpened investors’ focus on assessing …
20th March 2024
This publication has been updated with additional analysis from the post-meeting press statement and press conference. CNB’s easing cycle has a lot further to run The Czech National Bank (CNB) cut its policy rate by 50bp again today, to 5.75%, and we …
Vladimir Putin secured a record victory in Russia’s presidential election over the weekend. The focus now will be on whether this emboldens Putin to devote more resources to the war effort, whether policymakers push through unpopular non-war fiscal …
18th March 2024
Pressure building in Turkey ahead of the election Pressures on Turkish policymakers are building ahead of the local elections on 31 st March as capital inflows have slowed and FX reserves are falling again. We doubt the central bank will hike interest …
15th March 2024
This page has been updated with additional analysis since first publication. Inflation picks further, rates to stay high for some time The rise in Russian inflation to 7.7% y/y in February highlights that price pressures in the economy remain strong and …
13th March 2024
Turkey’s balance of payments figures for January showed that the current account deficit continued to narrow, but the drop in capital inflows in recent months is a concern and it appears that this forced the central bank to sell FX reserves. This adds to …
12th March 2024
Setting the record straight on recent HUF weakness The dispute between the Hungarian central bank (MNB) and the government heated up further this week, which has fuelled a narrative that threats to central bank independence are responsible for the recent …
8th March 2024
We discussed the implications of Russia’s election in a Drop-In on Tuesday, 12 th March. Click here to watch the 20-minute online briefing. The outcome of Russia’s presidential election taking place over 15-17 th March is not in doubt: Putin is all but …
7th March 2024
NBP keeps rates on hold, limited window for rate cuts this year The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and the scope for monetary easing this year looks relatively limited. We still think there is a …
6th March 2024
This page has been updated with additional analysis since first publication. Inflation continues to rise, tightening cycle now at risk of restarting The stronger-than-expected rise in Turkish inflation to 67.1% y/y in February adds to our concerns given …
4th March 2024
Turkish GDP growth continues to run hot Data released this week showed that Turkish GDP growth unexpectedly re-accelerated in Q4, which challenges the view that recent aggressive monetary tightening is rebalancing the economy. We published our initial …
1st March 2024
Turkey and Russia continue to show signs of resilience The manufacturing PMIs out of Central and Eastern Europe (CEE) generally ticked up last month, but still suggest that industrial sectors remained weak. In contrast, the increases in the PMIs in Turkey …
Economies in Central and Eastern Europe ended 2023 on a weak note, but the outlook for this year looks brighter. Lower inflation and interest rates should support a recovery in domestic demand over the coming quarters. In contrast, Turkey’s economy has …
29th February 2024
This page has been updated with additional analysis since first publication. Economy re-accelerates in Q4 The pick-up in Turkish GDP growth to 1.0% q/q in Q4 was driven by a rebound in private consumption and suggests that aggressive monetary tightening …
Economy maintains strong momentum The latest activity data for January suggest that Russia’s economy maintained solid growth at the start of this year, which supports our forecast for above-potential GDP growth of 3.0% over the course of 2024. Retail …
28th February 2024
Romania’s large twin budget and current account deficits remain a key concern. One near-term risk is that fiscal policy stays very loose (or is loosened further), particularly in view of elections taking place later this year. This could cause risk …
Sentiment edges lower, but still points to recovery The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in February, but still point to regional GDP growth strengthening in Q1. Economic sentiment …
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
27th February 2024
BoI stands pat as inflation risks remain strong Israel’s central bank opted to leave interest rates on hold at 4.50% today – in contrast to the consensus view for a cut – and the communications continued to emphasise upside inflation risks. Policymakers …
26th February 2024
Wage data still offering reasons for caution The latest wage data released out of Poland and Hungary this week showed that labour cost pressures have remained very strong in parts of Central and Eastern Europe (CEE). So despite another slew of …
23rd February 2024
New governor committed to the tight policy stance The hawkish statement accompanying the Turkish central bank’s decision to leave interest rates unchanged at 45.00% today supports our view that a shift to monetary easing remains some way off and we still …
22nd February 2024
Domestic demand to drive the recovery Poland’s activity data for January suggest that the reacceleration in wage growth at the start of this year supported domestic demand, while the export-orientated industrial sector struggled. We think that a further …
Deep contraction highlights the extent of the conflict damage The 19.4% q/q annualised contraction in Israeli GDP in Q4 was much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza. While a recovery …
19th February 2024
Ratings downgrade highlights realities in Israel The decision by Moody’s to deliver Israel’s first credit rating downgrade in its history late last week is a warning sign to policymakers that the strength of the public finances should not be taken for …
16th February 2024
Tightening cycle comes to a close, but rates to stay high Russia’s central bank (CBR) left its policy rate on hold at 16.00% as expected today and we think that inflation pressures will prevent it from cutting interest rates for most of this year. Today’s …
The Czech economy has had the weakest performance of any EU country since the pandemic, and we think that growth will disappoint expectations again in 2024. This will keep inflation contained and put pressure on the central bank to loosen monetary …
Plunge in inflation seals the deal on a larger rate cut We’d expected a large fall in Czech inflation in January, but the collapse from 6.9% y/y in December to just 2.3% y/y shows that price pressures are dissipating even more quickly than we’d …
15th February 2024
Inflation pressures unlikely to prompt another hike The stabilisation in Russian inflation in January, at 7.4% y/y, should provide cover for the central bank to leave its policy rate unchanged at 16.00% at its meeting on Friday, rather than continue the …
14th February 2024
At a standstill at the end of 2023 Q4 GDP figures out of Central and Eastern Europe (CEE) showed that the region ended last year on a weak note, but the outlook for 2024 looks brighter. While soft external demand is likely to remain a drag on growth over …
Above-target inflation to keep NBR in a hawkish mood The National Bank of Romania (NBR) left its policy rate on hold at 7.00% again today and, while interest rate cuts are likely to start around mid-year, we think that monetary easing will be less …
13th February 2024
Is euro adoption the path forward for Czechia? The Czech government’s debate on adopting the euro reignited at the start of this year and took another step forward this week, although we think that the potential benefits of joining the single currency …
9th February 2024
The surge in labour costs across Central and Eastern Europe (CEE) in recent years has led to a sharp loss of competitiveness and raised concern about the impact on the region. We remain relatively optimistic on the medium-term outlook and still think that …
CNB steps up its easing cycle The Czech National Bank (CNB) accelerated the pace of its monetary easing cycle today with a 50bp interest rate cut, to 6.25%, and the post-meeting communications support our view that an even larger interest rate cut is on …
8th February 2024
Governor Karahan committed to tight policy, rate cuts some way off The communications from new Turkish central bank governor Karahan at today’s Inflation Report briefing will have helped to reassure investors that the change at the helm of the central …
Economy rebounds strongly following war and sanctions shock Russia’s economy expanded by 3.6% over 2023 as a whole, marking a sharp rebound from a contraction of just 1.2% in 2022 (revised from 2.1%). The activity data for December suggest that the …
7th February 2024
Rates on hold, March rate cut is in the balance The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and we think that an interest rate cut at the next meeting in March looks finely balanced. Our current assumption is that …
Headline inflation picks up, all eyes on new governor Headline inflation edged up slightly in Turkey to 64.9% y/y in January, and the m/m figure – a 6.7% increase on the back of a large minimum wage hike – looked even worse. The figures highlight the …
5th February 2024
EM Drop-In : We'll be discussing EM policy easing, debt risks and the outlook for bond yields in our monthly EM drop-in on Thursday 8th February . Register here . Ukraine aid deals ends a week of uncertainty Hungary dropped its veto against the EU’s …
2nd February 2024
CEE industry still struggling, input prices diverge in Turkey and Russia The manufacturing PMIs out of Central and Eastern Europe (CEE) for January remained soft and haven’t changed the broad picture that the region’s industrial sectors continue to …
1st February 2024
Inflation continued to fall sharply across Central and Eastern Europe at the end of 2023, but we think that the disinflation process is entering a more difficult phase in 2024 as demand is beginning to recover. While monetary easing cycles are likely to …
31st January 2024
Soft annual figure suggests weak end to 2023 The weaker-than-expected 0.2% expansion in Polish GDP over 2023 as a whole suggests that the economy struggled at the end of the year. We think this weakness will prove temporary and that activity should …
MNB errs on the side of caution The Hungarian central bank’s (MNB’s) communications following its meeting today confirm that the decision not to accelerate the pace of its easing cycle was due to the recent ratcheting up of tensions between the government …
30th January 2024
This page has been updated with additional analysis since first publication. Regional recovery continues The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in January, but our regional measure …
The start of a slow recovery The meagre 0.2% q/q expansion in Czech GDP in Q4 confirms that the economy contracted over 2023 as a whole, and we think that this is likely to be followed by tepid growth this year. We maintain our below consensus GDP …
Were the EU to block Hungary’s access to funds (if it vetoes financing for Ukraine at this week’s summit), as reports on Sunday suggested, this would probably have a smaller direct impact on Hungary’s economy and financial markets than most would think. …
29th January 2024
Hungary skating on thin ice with new rate proposal The proposal by the Hungarian government this week to change the reference rate used to price bank loans risks undermining the central bank’s (MNB’s) independence and presents a further upside threat to …
26th January 2024
Turkey’s policy U-turn underway since the election last year has been relatively encouraging so far and policymakers’ commitment to orthodoxy has given us reason for optimism. While the scale of the challenge of achieving macroeconomic stability is …
25th January 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
Hiking cycle at an end, rates to stay high The 250bp interest rate hike from Turkey’s central bank (CBRT) today, to 45.00%, marks an end to its tightening cycle. Encouragingly, the communications were relatively hawkish and suggest that policymakers …