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bne December 2018 The Month That Was I 7
Economics
Eastern Europe
The endemic corruption in Ukraine is costing the country some 2 percent- age points of growth, the International Monetary Fund (IMF) representative in Ukraine said on November 13. The IMF forecasts that annual growth in Ukraine would be 2pp higher if it weren’t for corruption.
Russia’s IHS Markit Russia Services Purchasing Managers Index (PMI) surged in October to 56.9 from 54.7 a month earlier on the back of improved economic momentum, Markit reported on November 6. The services result comes only a day after Market reported a return to growth in the manufactur- ing PMI that went back into the black printing a gain of 51.3, just ahead of the 50 no-change mark after four months of contraction.
Trade turnover between Russia and Turkey will reach $30bn in 2018. In 2017, the trade turnover between Russia and Turkey was $23.36bn, up 37% com- pared to 2016. Exports were up 33% and stood at $18.2bn in 2016, while imports were up 57.5% and reached $3.4bn.
In January - August 2018 the trade turnover was $17.3bn, according to the Federal Customs Service.
Russia’s Consumer Price Inflation (CPI) in October continued to accelerated registering 3.5% year-on-year, up from 3.4% in September, versus 3.1% seen in August and 2.5% in July. The rate remains below the CBR’s target rate of 4%.
Ukraine’s third quarter GDP growth slowed to 3.1% in annual terms, down from 3.8% in the second quarter, reports the National Bank of Ukraine. Low grain prices and rail freight bottlenecks pulled down growth. On the upside, remittances from workers abroad are coming in at almost $1bn a month, about 20% higher than last year’s levels. The central bank forecasts Ukraine will end this year with GDP growth at 3.4% and inflation at 10.1%.
Bilateral trade in goods between Ukraine and China in January-August 2018 increased by 21% compared to the same period in 2017, to $5.8bn, First Deputy Prime Minister, Minister
of Economic Development and Trade Stepan Kubiv has reported. "China is
a strategically important partner for Ukraine, our trade volume is constantly growing. During the eight months of 2018, the Ukrainian-Chinese bilateral trade in goods grew by 21%, to about $5.8bn," Kubiv said on Facebook.
Central Europe
Poland's consumer sentiment index fell 0.9 points m/m in October to 5.2, statistical office GUS announced. The fall in November, although the second in a row, is still too insignificant and does not constitute a series long enough to allow speculation that consumers – the driving force behind Poland’s ongo-
ing economic boom – are about to spend less in an environment of rising wages and a tightening labour market.
Latvia is expected to post the fastest growth in the Baltics this and next year, according to the latest EBRD fore- cast. The Latvian economy will expand 3.9% in 2018 and 3.5% in 2019, while Lithuania and Estonia are expected to grow slightly more slowly.
Estonia's producer price index (PPI) grew 2.8% y/y in September, accord- ing to data released by Statistics Esto- nia . The headline figure comes 0.1pp below the 2.9% annual expansion in September, extending the current trend of PPI inflation to 25 months.
Southeast Europe
Moody’s said Turkey is “one of the most vulnerable” as world growth decelerates. The rating agency is taking an increasingly anxiety-ridden view of the growth prospects of developing nations such as Turkey that “have relatively high
exposures to external financing and
are therefore the most vulnerable” as growth decelerates across advanced and emerging markets.
Bosnia’s foreign trade deficit amount- ed to BAM6.2bn (€3.2bn) in the first ten months of 2018, up 4.9% y/y, data from the country’s statistics office indi- cated. The trade gap is growing despite the government's efforts to boost exports and raise the competitiveness of local production.
The finance ministry presented a draft law on introducing progressive personal income and capital gains taxes in Mace- donia. The aim of the introduction of the progressive tax and the minimum guaran- teed income is to lower the gap between the poorest and richest people in Macedonia.
Eurasia
Economies in Central Asia and the South Caucasus will average annual growth of 4.2% in the coming years, the IMF said. The rate is less than half the rate of growth seen in the early 2000s. As such, the IMF believes the region needs to strengthen reform efforts to reduce gov- ernments’ roles within economies further rather than seeing growth from growing oil prices as an excuse to relax.
Kyrgyzstan’s total foreign trade turn- over grew by 7.3% y/y to $4.81bn in the first nine months of 2018. Trade expand- ed on the back of an ongoing recovery seen in Kyrgyzstan’s imports thanks to the modest 1H economic stabilisation of trade partners including Russia and Kazakhstan.
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