Page 5 - BNE_magazine_07_2020

bne July 2020 The Month That Was I 5
Economics
Eastern Europe
Russia’s federal budget in 2021 will have to transfer an extra RUB1 trillion ($14.3bn) to cover the deficit of the Pension Fund of Russia, with total transfers reaching over RUB4 trillion,
or as much as 20% of total budget expenditures, according to reports.
Over three-quarters of Russian SMEs are back in operation post- the coronacrisis lockdown. Russian SMEs were the hardest hit during the lockdown, and are slated to receive rather limited state support. Fast recovery in the segment supports the view of milder recession (below 5% GDP decline) in Russia in 2020.
The net inflow of foreign direct investment into Russia last year was $32bn, a huge jump from the previous year’s exceptionally weak numbers, reports BOFIT. Last year saw also new equity investment instead of just reinvested profits. In contrast, the net outward FDI flow from Russia shrank last year to $23bn.
Industrial production in Ukraine decreased by 12.2% in May compared to May 2019, while in April the
decline was 16.2%, in March it was 7.7%, and in February 1.5%, the
state statistics service said on June
The drop in investment dragged on Ukrainian GDP growth in 1Q20. The headline figure showed a 1.3% year-on- year contraction compared with 1.5% growth in 4Q19.
Central Europe
Polish retail sales retreated by an unexpectedly mild margin of 7.7% y/y in constant prices in May, according
to the statistics office GUS. Analysts had been expecting turnover to slide 12.9% y/y after collapsing 22.9% y/y in April.
Poland posted a trade surplus of PLN3.3bn (roughly €800mn) in January-April, according to statistics office GUS, more than doubled the surplus of PLN1.5bn posted in the same period last year. Exports declined 5.3% y/y to PLN320.8bn at the end of the fourth month while imports fell 5.8% y/y to €317.5bn.
Hungary's economy will contract
in 2020 at a rate not seen since the 2009 global financial crisis but is set to rebound next year, Fitch Ratings said. Fitch expects real GDP to fall by 5.9% this year due to the coronavirus shock, but forecasts 5.4% real growth for 2021. The government expects a V-shaped recovery of -3% in 2020 but a 4.8% rebound in 2021.
Output of Hungary's automotive industry, an engine of industrial growth, contracted 80% y/y in April because of shutdowns at the country’s major manufacturing sites, according to the statistics office KSH. The decline in headline industrial output accelerated to 36.8% y/y in April from 5.6% in March.
Slovakia's economic sentiment indicator was down to its lowest level ever in June. The three-month moving average declined by 7.4 points month-on- month to 64.8 points in June – the lowest figure since the beginning of the survey.
Slovakia's economy is expected to drop by 9.8% year-on-year in 2020, due to the coronavirus outbreak, according to the finance ministry. The economy is projected to bottom out in 2H20, before recovering with 7.6% y/y growth in 2021 and reaching the pre-coronavirus level in 2022.
The unemployment rate in Slovakia reached its highest level for May in three years, amounting to 7.2%, up by 0.63 percentage points (pp) month- on-month and by 2.32pp year-on-year, according to the government.
Southeast Europe
Slovenia’s retail trade turnover increased by 12.8% month-on-month in May after a three-month decline after the lockdown was lifted, but was 10.6% lower than a year earlier, the statistics office said.
Romania's budget deficit reached RON38.8bn (€8.1bn) in January-May, 2.6 times more than in the same period last year. Half of the gap is the effect of the coronacrisis spending. The deficit already accounts for nearly 3.6% of
the year's GDP.
Romania has absorbed only 29%
of the €30.9bn EU’s structural and cohesion funds earmarked for the country under the 2014-2020 multi- annual financial framework, as of February 2020 – second-to-last among the EU countries, after Croatia (27.1% absorption rate).
Net foreign direct investment (FDI)
in Bulgaria was €154.7mn in the first four months of 2020, versus €130.8mn in January-April 2019, according to the central bank. Foreign investment in Bulgaria has collapsed, decreasing ten times since 2007.
23.
Ukraine retail sales advanced 3.1% year on year in real terms in January- May, slowing slightly from 3.2% y/y growth in 4M20. In May, retail sales dropped 3.1% y/y (vs. a 14.9% y/y plunge in April), but advanced 15.0% month on month in real terms.
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