Page 5 - bne_August 2020_20200810

bne August 2020 The Month That Was I 5
Economics
Eastern Europe
Russian consumer confidence crashed in 2Q20 while business confidence has started to recover from a nadir
in May. Consumer confidence index crashed to -30, its lowest level since 2016. Business confidence fell to a much more modest -9 in May.
One in three Russian companies lost money over the first four months of this year, according to Rosstat. The share of unprofitable organizations in Russia in January-May 2020 amounted to 36%. At the same time, the profit of Russian enterprises fell by more than two times, according to Rosstat data.
The board of the Central Bank of Russia (CBR) cut the key rate by 25 basis points (bp) to 4.25% on July 24. The decision was unexpected as the consensus expectation was that the CBR would make a bold
cut of 50bp.
Ukraine will have GDP growth of 4.6% year on year and inflation
of 7.3% YTD in 2021, according
to Ukraine’s Cabinet of Ministers’ macroeconomic forecast for 2021-2023. GDP growth will slow to 4.3% y/y growth in 2022, before accelerating
to 4.7% y/y in 2023.
Real wages in Ukraine increased 4.8% year on year in June, accelerating
from 1.4% y/y growth in May. The average monthly nominal wage rose
to UAH11,579 a month ($434) from UAH10,542 in May, or 9.5% month on month in real terms.
The National Bank of Ukraine (NBU) kept its policy rate on hold at 6%, the regulator said on July 23. The NBU noted that this rate will allow inflation to be restrained during an expected economic revival in 2020-2021, and will give enough room for pushing
the cost of credit down to single digits.
Central Europe
European Union leaders reached agreement on a massive stimulus plan for the bloc’s economies in the early hours of July 21, after days of intense talks. The package involves the €750bn Next Generation EU (NGEU) recovery fund, from which grants and loans will be provided to support EU economies
hit by the coronacrisis. The EU plans
to borrow the €750bn on international markets.
Poland will likely keep its central bank’s interest rates at the current all-time low of just 0.1% in 2020 and possibly in 2021, two members of the rate-setting body the Monetary Policy Council (RPP) told local media.
The Polish budget will post an unprecedented deficit of around PLN100bn (€22.61bn) in 2020 as
a result of the government’s effort to ease the impact of the coronavirus pandemic on the economy. The deficit is the country has had in the 21 century.
Polish industrial production recorded its first expansion since COVID-19 outbreak in July of 0.5% y/y in unadjusted terms in June, statistical office GUS reported. The growth follows a decline of -17% y/y in May. Analysts were surprised by the positive result.
Industrial production in the Czech Republic decreased in real terms
by 25.7% year-on-year in May,
while seasonally adjusted industrial production increased by 13.8% month- on-month, according to data published by the Czech Statistics Office (CSO)
on July 7.
Southeast Europe
Turkey’s economy is “only one shock away from a crisis”, Maya Senussi, a senior economist at Oxford Economics. Turkish President Recep
Tayyip Erdogan has countered the
latest slump by ordering state-run
banks to flood the market with cheap credit. But ratings agencies including Standard & Poor’s says the policy implies economic imbalances may be returning, threatening growth prospects.
Romania's public deficit in the first half of the year soared to RON45.1bn (€9.4bn), 126% more than in the same period last year but less than planned, according to Finance Minister Florin Citu. Citu said the country does not need an agreement with the IMF this year and the government would stick to the 6.7%-of-GDP public deficit target.
Romania’s retail sales volume index bounced back by 20% in May compared to April after the deep 22% plunge seen in April, according to the country’s statistics office. Compared to February, before the coronavirus (COVID-19) outbreak, the index still lags by 9.4%. In annual terms.
Romania’s industrial production rose by 15.1% in May m/m, partly recovering after the deep 27.9% dive
in April. The recovery was stronger in the core manufacturing sector: +20.6% m/m in May, after the 32.3% m/m decline in the fourth month of 2020.
The Slovenian economy is projected to contract by 7.8% in 2020 and to recover next year with a 4.5% growth assuming no coronavirus second wave, according to the OECD.
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