Page 7 - BNE_magazine_12_2019 dec19

bne December 2019 The Month That Was I 7
Economics
Eastern Europe
Russia’s sanctions on the import of food products from the European Union (EU) is costing Russian consumers RUB445bn ($7bn) a year, or about $50
a year per head, according to a study. The cost is mainly borne by consumers that absorb 84% of the increased costs.
Russia’s State Statistics Service published preliminary GDP estimates for 3Q19 that posted a 1.7% year-on-year growth in the quarter, up from 0.9% y/y in 2Q19 and only 0.5% in the first quarter. The growth for the whole of the first nine months of this year was 1.1% y/y, which is almost half what the government was predicting at the start of the year.
Russia’s Service PMI posted a strong 55.8 in October, up from 53.6 in September and helped lift the Composite PMI to a healthy 53.3, up from 51.4
in September. Any score over the 50 no-change mark represents an expansion.
Ukraine climbed seven places in the last year to 64th place on the World Bank’s Doing Business ranking, its best score ever that made it one of the fastest reformers in the survey. Ukraine did best in dealing with construction permits (rising to 20 from 30th place), getting credit (moving to 32 from 37th) and protecting minority investors (rising to 45 from 72nd).
Ukraine’s current account (C/A) deficit grew to $1.1bn September from $0.4bn in August due to a deteriorated balance of primary income and increased trade deficit, the National Bank of Ukraine (NBU) reported on October 31. In 9M19, the C/A deficit amounted to $2.7bn (vs. $3.4bn in 9M18).
Ukraine's unemployment started
to fall more noticeably in the second quarter of this year. The unemployment level fell from 9.2% in the first quarter to 7.8% in the second. Part of the reason for the fall is the improving economy and more job
creation, but more negatively the mass emigration of the workforce to Ukraine’s neighbours that simply means there are not enough workers.
Central Europe
Polish GDP grew by a seasonally adjusted 4% y/y in the third quarter, easing 0.2pp against the expansion rate recorded in the second quarter, according to a flash estimate released by the Central Statistical Office GUS.
Big international companies such as Google, Facebook, Apple and Amazon are likely to be subject to a new digital tax in the Czech Republic in 2020. The government approved a proposal
to introduce a 7% tax on online services provided by global players in the country, according to a press release published by the ministry on November 18. The proposal has yet to be approved by Parliament.
Czech economic growth is projected
to slow to 2.1% in 2020 from 2.6%
this year, driven mainly by household consumption and government spending, according to the Organization for Economic Cooperation and Development (OECD). In 2021, the OECD expects an economy to ease to 2-2.25%.
Unemployment in the Czech Republic is declining once more. In October,
it dropped to 2.6%, from 2.7% in the last three consecutive months, as the Czech Labour Office (CLO) reported
on November 8. There were 196,500 unemployed people in October, the lowest figure since October 1996.
Despite a slight increase in IHS Manufacturing Purchasing Managers Index (PMI) in the Czech Republic to 45.0 in October from 44.9 in September, the data signalled a further deterioration in the Czech manufacturing sector health, led by substantial contractions in production and new orders, according to IHS Markit data released on November 1.
Southeast Europe
Turkey's unemployment rate officially edged up to 14.0% in the July- September period from 13.9% a month earlier, Turkish Statistical Institute (TUIK) data showed on November 15. Youth unemployment climbed to a record official high of 27.4%.
Turkey’s current account recorded
a higher-than-expected surplus
of $2.48bn in September, central bank data showed on November 12. Tourism revenues and a relatively low trade deficit pushed up the figure. The 12-month rolling current account balance reached a deficit of $58bn
in May 2018, but it has plunged since the Turkish lira crisis in the summer last year. There was an annual current account surplus of $5.9bn in September.
Eurasia
The International Monetary Fund (IMF) said economic growth in Kazakhstan remains strong, thanks to supportive fiscal policy, oil-and-gas sector investment and retail lending. GDP grew by 4.3% in the first three quarters of 2019, led by the non-oil sector, especially construction and services.
The International Monetary Fund said on November 8 that the Caucasus and Central Asia (CCA) is set to grow by an overall 4.5% in both 2019 and 2020 in spite of global trade tensions and the slowing growth of key trading partners.
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