CEE Quarterly - Economics & FI/FX Research

12 Februarie 2009

UNICREDIT TIRIAC BANK S.A.

 

Emerging Europe: touching down

Emerging Europe’s long-term real convergence story ran head first into the global slowdown in Q4/08, with the region’s economic sentiment indicators deteriorating at a faster pace in Q4/08 than they did in Q4/98 following the Russian crisis. In contrast to 1998, however, the principal driver of Q4’s/08 slowdown was a collapse in global demand.

Collapse in external demand hit CEE growth across the board in Q4/08

The extent to which weak demand is responsible for Emerging Europe’s slowdown is clearly illustrated by the European Commission's January 2009 quarterly survey. Here, a lack of demand, rather than finance, was cited in all countries as by far the major constraint on production. The implication of the collapse in export demand is that all countries recorded a sharp slowdown in Q4/08, even if they had otherwise low macro vulnerability readings, such as the Czech Republic.

The GDP growth consensus has been slashed, but risks of further radical revisions lower are diminishing

Against the backdrop of a sharp deterioration in global and regional indicators, consensus forecasts for 2009 global, EMU and CEE GDP growth were cut significantly in the latter half of 2008, with the CEE 2009 consensus now at 0.6% from 5.7% in June 2008. We see some downside risk to the consensus and forecast CEE to contract 0.8% in 2009, though by the same token we do not expect to see a similar magnitude revision lower in the GDP consensus in the coming six months as in the previous six months. This also implies we expect the CEE-EMU growth differential to remain in positive territory: convergence is on the back burner but in some sense will still sustain, even in 2009.

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The tricky lag LUCIAN CROITORU Adviser to the Governor - BANCA NAŢIONALĂ A ROMÂNIEI Lucian Croitoru, Adviser on monetary policy issues to the National Bank of Romania Governor, talks about the NBR’s next moves and explains why the decrease ofthe policy rate hasn’t been reflected into lower interest rates on bank loans. mai mult... The turnaround CRISTIAN SPORIS Secretar de Stat - MINISTERUL ECONOMIEI ŞI FINANŢELOR Cristian Sporis, Secretary of State at the Ministry of Public Finance, in charge with the national treasury and public debt, explains how the state managed to borrow money at the lowest costs in the last seven years and how it turned from a clear market taker into a player with a strong position on the market. mai mult...