Page 7 - BNE_magazine_bne_July2019_20190707

bne July 2019 The Month That Was I 7
Economics
Eastern Europe
The foreign currency and gold reserves of the Central Bank of Rus- sia (CBR) amounted to $502.7bn
as of end of the week of June 14 – the first time the Central Bank of Russia’s (CBR) gross international reserves (GIR) topped the $500bn mark since 2014, when the reserves were slashed from $510.5bn to $388bn by the need to support the plummeting ruble.
ated to 9.6% year-on-year from 8.8% y/y in April and rose to 0.7% month-on- month in May after rising 1% m/m in April, driven mostly by prices for food and transportation, according to the nation's state statistics service Ukrstat.
Central Europe
Lithuanian producer prices grew 3.9% y/y in May, data released by Sta- tistics Lithuania showed. The indicator’s growth rate eased 1.2pp compared to the annual expansion recorded in April, marking the 31st consecutive month of annual PPI growth.
The number of vacancies in Poland came in at 142,500 in the first quar- ter, a reduction of 10,000 or 6.5% y/y, according to data released by statistics office GUS. The falling number of vacan- cies does not counter the trend of long-term tightening of Poland’s labour market, where the workforce benefits from decreasing unemployment and wages rising as a result.
The Slovak central bank increased its counter-cyclical capital pillow from 1.5% to 2%. The banks will have to raise their counter-cyclical capital reserves from August 2020, said Slovakia's National Bank governor Peter Kazimir.
Southeast Europe
The Western Balkans saw an increase in FDI in the last year, according
to data from the Vienna Institute
for International Economic Studies (wiiw), that was in contrast to the trends of declining FDI both globally and in the wider Central, Southeast and Eastern Europe region.
Romania may be unable to pay public sector salaries by the end of the year, it was revealed in a leaked letter from Finance Minister Eugen Teodorovici that asked ministries to “reduce the number of employees and/or the total
salaries”. The letter was published shortly after Bucharest Mayor Gabriela Firea announced that the Romanian capital is under “undeclared bankrupt- cy”, and asked Teodorovici for an addi- tional €250mn for the municipality.
Romania’s retail sales maintained a robust growth rate in April, weaken- ing only marginally to 7.1% y/y after the robust 8.5% advance in Q1. This
is seen as supportive for GDP growth, but poses increasing risks since robust demand generates more imports; exports increased by 3.2% y/y in Q1 while imports were driven up by strong domestic demand by 7.4% y/y.
Eurasia
Tajikistan’s central bank cut its key refinancing rate to 13.25% from 14.75%, despite inflation in April being recorded at 8.3% as price gains contin- ued to accelerate. The decision to cut the refinancing rate appears counterin- tuitive as the regulator’s ideal targeted inflation rate stands at 7%, according to the central bank’s website. The cut will likely only help further spur inflation.
Consumer prices in Kyrgyzstan edged up by 0.1% y/y in May, switching from the deceleration of 0.5% recorded in April, data published by the country's national statistics body showed. Defla- tion lasted for three months in 2019 following a general uptick in consumer prices throughout 2018 and in January this year tied to recovering remittances flowing in from migrants employed in Russia.
Azerbaijan’s central bank cut its refi- nancing rate to 8.50% from 8.75% as inflation expectations were stable. The national lender also adjusted its rate cor- ridor. It announced a lower boundary of 6.5% and an upper boundary of 10.5%. Previously the boundaries were 6.75% and 10.75%, respectively.
13.
Russia's current account of the bal- ance of payments posted a surplus
of $48.7bn in January-May 2019, expanding by $1.8bn year-on-year, according to the preliminary data by the Central Bank of Russia (CBR). In the reporting period private sector capital outflow reached $35.2bn, doubling
y/y from $18.9bn for the same period of 2018. Russia's international reserves increased by $28bn.
Russia's federal budget posted a surplus of RUB1.1 trillion ($17bn)
in January-May 2019, according to
the data by the Finance Ministry. The surplus is more than half of this year's target surplus of RUB1.9 trillion or 1.7% of GDP in the budget for the full year.
Fitch Ratings downgraded Russia's GDP growth forecast for 2019 from 1.5% to 1.2%, following unexpectedly weak economic performance in the first quarter.
Inflation pressures in Ukraine have not subsided despite the central bank's decision to keep interest rates high mak- ing more cuts in the near term unlikely. Ukraine’s consumer inflation acceler-
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