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Macroeconomic Forecast Bulgaria (Emerging Europe Monitor - South East Europe)

Thu, 25 Jun 2009 00:00 GMT

Industrial output plummeted by 20.0% y-o-y in April, surpassing the 16.9% contraction the previous month and confirming the disorderly downtrend. Given the potential for a tentative improvement in global demand conditions during the tail end of 2009, and with base effects likely to emerge as a result of production broadly slowing since mid-2007, we do not expect the full-year production reading to be as severe as in previous months. That said, to reflect the severity of the previous month's data, we have revised our full-year forecast to -7.2% from a previous projection of -5.1%.

Financing Strain To Drive C/A Correction (Emerging Europe Monitor - South East Europe)

Tue, 02 Jun 2009 00:00 GMT

Macedonia's current account deficit is set to contract to 6.4% of GDP in 2009 from 13.1% in 2008, despite a further widening of the overall shortfall in January-February. The principal factor forcing a correction will be pressure on the financial account, with the difficulties of securing external capital set to remain a key source of macroeconomic risk through the medium term.

Macroeconomic Forecast Albania (Emerging Europe Monitor - South East Europe)

Wed, 24 Jun 2009 00:00 GMT

Macroforecast

Macroeconomic Forecast Turkmenistan (Emerging Europe Monitor - Russia and CIS)

Fri, 26 Jun 2009 00:00 GMT

Despite the potential for a sustained rally in global commodity prices through H209, we believe that the severity of the global downturn so far this year will ensure that Turkmen growth slows towards our forecast 5.4% outturn for 2009. Moreover, Turkmenistan's relative economic isolation will likely prevent an even deeper downturn from developing. Beyond 2009, we believe that increasing demand for Turkmen energy exports, on the back of an improving global economic outlook, will help drive growth up to a forecast average 9.6% over the course of 2010-2013.

Macroeconomic Forecast Uzbekistan (Emerging Europe Monitor - Russia and CIS)

Fri, 26 Jun 2009 00:00 GMT

We believe that the Central Bank of Uzbekistan will keep the sum's crawling peg against the US dollar over the medium term, allowing for controlled depreciation against the greenback. Specifically, we target an end-year exchange rate of UZS1,560/US$, depreciating to UZS1,896/US$ by end-2013. Continued weakening of the sum will go some way to bolster the export sector going forward, though will also stoke inflationary pressures over the medium term.

Pragmatic Energy Policy To Continue (Emerging Europe Monitor - Russia and CIS)

Fri, 26 Jun 2009 00:00 GMT

Russia's gas monopoly Gazprom has announced that it expects to sign a deal with the Azeri government next week regarding securing gas exports from the latter. However, we believe Baku will be reluctant to make any firm agreement with the company as it will prefer to keep its options open and to pursue a pragmatic energy and foreign policy - balancing both EU and Russian influence.

Thaw In Nagorno-Karabakh Conflict To Continue (Emerging Europe Monitor - Russia and CIS)

Mon, 22 Jun 2009 00:00 GMT

While the recent talks between the presidents of Azerbaijan and Armenia did not result in a breakthrough over the issue of the frozen conflict of Nagorno-Karabakh, we believe the increased interest of regional players in promoting stability in the region could result in a solution to the frozen conflict in the medium term.

Political Stalemate To Continue (Emerging Europe Monitor - Russia and CIS)

Mon, 08 Jun 2009 00:00 GMT

Efforts by Ukraine's main political factions to form a broad coalition government collapsed on June 7. The negotiations, which were taking place between Prime Minister Yulia Tymoshenko and leader of the opposition Party of Regions (PR), Viktor Yanukovych, sought to finalise an agreement over a wide swath of constitutional reforms seen as necessary to improving long-term stability in the country.

Political Instability To Remain Elevated (Emerging Europe Monitor - Russia and CIS)

Thu, 18 Jun 2009 00:00 GMT

The Moldovan Communist Party is likely to again win a majority at the July 29 general election re-run, but it is far less clear that it will secure the 61-seat supra-majority required to appoint a president without opposition support. We caution that risks of widespread public unrest and policymaking instability are elevated in the short and medium term, which will impede the country's ability to effectively tackle the unfolding economic crisis.

Macroeconomic Forecast Lithuania (Emerging Europe Monitor - Central Europe & Baltic States)

Fri, 26 Jun 2009 00:00 GMT

The Lithuanian Finance Ministry announced that it expects economic output to contract by 18.2% (revised down from its previous -15.6% growth projection) in 2009. According to the latest data from Statistics Lithuania, real GDP shrank by 12.6% in the first quarter of 2009. We hold to our projection that real GDP will fall by 12.6% this year, as although we expect the data for Q209 and Q309 to be similarly severe, we expect to see some stabilisation in the latter months of the year, on the back of base effects and a tentative improvement in global demand conditions.

Difficult Decisions Ahead For The Government (Emerging Europe Monitor - Central Europe & Baltic States)

Fri, 26 Jun 2009 00:00 GMT

The Lithuanian government's proposal to reduce budget expenditures by a further LTL1.0bn in a bid to meet its new 5.0% of GDP budget deficit target will prove controversial. Even if the government manages to get parliament to agree to the cuts, implementation of these will prove difficult, and we caution that there is the potential for further social unrest.

Euroscepticism To Weigh On EU Ties (Emerging Europe Monitor - Central Europe & Baltic States)

Thu, 25 Jun 2009 00:00 GMT

Czech President Vaclav Klaus is likely to eventually sign the EU's Lisbon Treaty into law, but he is set to delay this move until the Treaty is fully ratified by all other EU states, which probably means beyond the end of 2009. Moreover, while Lisbon itself would then come into force, we stress that a broader current of euroscepticism within Czech politics is likely to remain a source of friction in Prague's relations with the 27-member bloc, especially Germany and France.

Inflation To Dip Lower Before End-Year (Emerging Europe Monitor - Central Europe & Baltic States)

Wed, 24 Jun 2009 00:00 GMT

Czech inflation is set to fall a little lower by end-2009, as demand destruction continues apace, and we subsequently target end-year CPI growth of 1.0% y-o-y. That said, we forecast an uptick in inflation to 2.3% y-o-y by end-2010 as Czech GDP returns to positive growth.

Fiscal Deficit Likely To Overshoot Government Forecast (Emerging Europe Monitor - Central Europe & Baltic States)

Wed, 24 Jun 2009 00:00 GMT

Though the Polish government has decided to raise its fiscal deficit target by nearly 50%, we caution that the shortfall is still likely to overshoot official projections since the government's budget assumptions are unrealistic, in our view. What is more, we stress that the widening deficit is likely to further delay Poland's eventual euro adoption, which we expect to materialise in 2013 at the earliest.

Rate Cuts Off The Short-Term Agenda (Emerging Europe Monitor - Central Europe & Baltic States)

Thu, 18 Jun 2009 00:00 GMT

Hungarian inflation is likely to remain above-target in the short term as the global commodities bounce remains in play, and this is in turn likely to tie the hands of the National Bank of Hungary (NBH) when it comes to stimulatory monetary policy. Moreover, we caution that the vulnerability of the Hungarian forint to its weak underlying fundamentals will keep monetary policy risks weighted to the upside through H209.