http://www.emergingeuropemonitor.com Emerging Europe Monitor RSS Feed from Business Monitor International en Copyright 2010, Business Monitor International Ltd Thu, 02 Sep 2010 06:30 GMT Thu, 02 Sep 2010 06:30 GMT AFP RSS Generator We hold to our forecast for Estonian inflation to average 2.0% in 2010, with latest data for July recording a 2.8% y-o-y rise for the Harmonised Index for Consumer Prices (HICP). Over the first seven months of the year, Estonian inflation has averaged 1.6% y-o-y, marking a substantial increase over the same period in 2009 and a clear push out of deflation. That said, we maintain that a lacklustre and protracted recovery for the Estonian economy, weighed down by persistently weak demand from the eurozone will weigh on demand pressures going forward. Headline inflation is forecast to fall back down to 1.9% by end-2010. http://www.emergingeuropemonitor.com/file/91785/Macroeconomic-Forecast-Estonia.html Thu, 26 Aug 2010 00:00 GMT The current account deficit fell sharply in the first five months of 2010, due to weak import growth and surging remittances. We target a shortfall of 5% of GDP in 2010, falling slightly further in 2011. Tumbling FDI inflows are a potential concern, as we expect the current account deficit to remain moderately high throughout the forecast period. http://www.emergingeuropemonitor.com/file/91786/C-A-Deficit-To-Ease-Further-In-Short-Term.html Thu, 26 Aug 2010 00:00 GMT A major upside surprise in second quarter Estonian real GDP growth has raised risks to our 0.2% and 2.2% growth forecasts for 2010 and 2011 respectively. We maintain though, that while the Estonian recovery has at least initially come in stronger than expected, that a protracted and lacklustre period of growth is still the core scenario. A downturn in global growth and persistent weakness from eurozone demand in 2011 will reinforce continued deleveraging and deflationary risks domestically. This will ensure that return to pre-crisis growth levels remains off the cards. http://www.emergingeuropemonitor.com/file/91781/Recovery-On-But-Growth-To-Remain-Weak.html Wed, 25 Aug 2010 00:00 GMT The Estonian government is likely to tap the international bond market for general government financing in 2011 after the country adopts the euro. Public bond issuance in Estonia has been historically rare, with healthy fiscal balances and strong real GDP growth ensuring that government debt levels are among the lowest in the region. That said, with the country facing a protracted recovery from its 2008-2009 recession and the government having to meet major refinancing commitments for http://www.emergingeuropemonitor.com/file/91782/New-Bond-Issuance-Likely.html Thu, 26 Aug 2010 00:00 GMT International pressure to resolve the name dispute with Greece will increase again ahead of the UN General Assembly in New York in September. Local press suggest that UN mediator Matthew Nimitz will soon propose the next step in negotiations between Skopje and Athens, with hope still lingering that a compromise can be found before November's NATO summit (when Macedonia's membership application will be reviewed). If entry is postponed again, the government could suffer a loss in support, particularly from its ethnic-Albanian coalition partners. http://www.emergingeuropemonitor.com/file/91783/Increased-Pressure-To-Resolve-Name-Dispute.html Thu, 26 Aug 2010 00:00 GMT The budget deficit reached EUR111mn (1.3% of GDP) through to the end of July, according to latest preliminary data. The monthly budget showed a small surplus (EUR13mn) in July, but we expect the shortfall to widen to 2.7% of GDP by the end of the year. This is just above the 2.5% of GDP official budget deficit target, though would mark a stabilisation from 2009. We remain cautious that a region-wide downturn in 2011 could weigh on public finances that year, posing a risk to our 2.7% of GDP budget deficit forecast. http://www.emergingeuropemonitor.com/file/91784/Macroeconomic-Forecast-Macedonia.html Thu, 26 Aug 2010 00:00 GMT Signs of Lithuania's painful internal devaluation continue to abound, with the current account posting a EUR12.72mn surplus during the first quarter, in stark contrast to the EUR16.08mn deficit recorded during the same period 12 months earlier. This comes on the back of the current account balance flipping into a 3.8% of GDP surplus in 2009, following a 12.0% of GDP deficit in the previous year. We continue to project current account surpluses over the next four years, seeing the surplus narrowing slightly to 3.1% of GDP in 2010. http://www.emergingeuropemonitor.com/file/91779/Macroeconomic-Forecast-Lithuania.html Thu, 26 Aug 2010 00:00 GMT Slovenian unemployment stayed flat at 10.5% according to latest data for June, reinforcing our view that the economic recovery will be protracted. Indeed, while Slovenia hit the trough of its recession in Q309, unemployment has barely fallen, down only 0.2pps from its peak of 10.7% in February. The latest data confirms our view that the jobless rate is likely to improve, though only at a slow pace, with our end-2010 forecast remaining at 10.0%. In 2011, we expect unemployment to fall further to 9.0%, still well off of the pre-recession low of 7.0%. http://www.emergingeuropemonitor.com/file/91780/Macroeconomic-Forecast-Slovenia.html Fri, 27 Aug 2010 00:00 GMT A core Slovenian government policy to bolster local banks through loan guarantees and liquidity support measures is likely to continue through 2011. A weak macroeconomic recovery and a downturn in global demand growth in the latter half of 2010 will ensure that government economic policy remains cautious, with aggressive fiscal austerity unlikely. The August 24 regulatory approval by the European Union to extend the bank support measures reinforces our http://www.emergingeuropemonitor.com/file/91777/Government-Bank-Support-Continues.html Fri, 27 Aug 2010 00:00 GMT Relations between Lithuania and neighbouring Belarus are being tested amid a diplomatic row surrounding the arrest of the former's senior police officer, Laimonas Bankauskas on the two countries' border on August 16 for alleged possession of drugs. The head of Lithuania's mounted police force was apprehended by Belarus security forces on the border, after reportedly having discovered 45.5 grams of amphetamine in his car. Lithuania's President Dalia Grybauskaite has called on the Belarus authorities ensure a 'prompt and impartial' investigation, expressing hope that the incident will not taint bilateral relations. http://www.emergingeuropemonitor.com/file/91778/Revising-Our-Rating-On-Fiscal-Concerns.html Thu, 26 Aug 2010 00:00 GMT Despite a lacklustre recovery and expectations for global demand growth to turn downwards again in H210, we maintain that another period of deflation is unlikely in Slovenia. We hold to our end-year consumer price growth forecasts of 1.7% and 2.3% for 2010 and 2011 respectively. Euro weakness in particular, is likely to ensure that the key food and energy price components of the consumer price basket remain elevated. http://www.emergingeuropemonitor.com/file/91776/Weak-Euro-Will-Prevent-Another-Bout-Of-Deflation.html Fri, 27 Aug 2010 00:00 GMT Despite Prime Minister Sali Berisha's pledge on August 10 that his party was prepared to implement a European Parliament resolution investigating the still contested June 2009 parliamentary election, we stress than an end to the now 14-month long political crisis does not look in sight in the short term. Indeed, up until this point, both the ruling Democrat Party and opposition Socialist Party have shown little willingness to compromise, even in the face of pronounced pressure from the EU which has threatened to stall the country's membership application to the bloc. http://www.emergingeuropemonitor.com/file/91740/Crisis-Will-Endure.html Wed, 25 Aug 2010 00:00 GMT France deported over 200 Roma to Romania during August according to its Interior Ministry, as part of a crackdown on illegal immigration by President Nicolas Sarkozy. The French government offered EUR300 to each Roma adult who accepted a voluntary return, while children were offered EUR100 each. The action has proved controversial, as the French government dismantled 51 illegal Roma camps through August - drawing criticism from the Vatican which stated that 'one cannot generalise and take an entire group of people and kick them out'. Despite this potential source of friction between Romania and France, we expect relations to remain generally cordial - as illustrated by the Romanian government's eagerness to hold talks over the issue. http://www.emergingeuropemonitor.com/file/91695/Roma-Expelled.html Tue, 24 Aug 2010 00:00 GMT The robust rate of economic activity in Turkey witnessed during the first half of the year appears to be spilling over into H210, as leading indicators suggest a continued narrowing of the output gap. Though a moderation in activity is still expected towards the latter stages of the year, we are adjusting upward our full-year real GDP growth forecast to 6.3% from 4.7% previously. Our revised growth outlook for the Turkish economy this year is based on expectations for stronger final household consumption growth, which we now see coming in at 4.7%, and 8.0% real growth in gross fixed capital formation. Combined, these two categories of GDP by expenditure are projected to contribute as much as 4.9 percentage points (pps) to the headline real GDP growth rate in 2010, having previously shaved some 6.1pps off growth last year. http://www.emergingeuropemonitor.com/file/91694/Macroeconomic-Forecast-Turkey.html Tue, 24 Aug 2010 00:00 GMT The Central Bank of Turkey (CBT) will continue to pursue its gradual 'exit strategy', which it first announced in April, in a push to return monetary policy to pre-crisis conditions. In a press release on July 29, the CBT announced it was raising the FX reserve requirement ratio for banks by 50 basis points (bps) to 10.00% from 9.50%, a move the CBT expects will soak up approximately US$719.6mn in FX liquidity. This comes on the back of a 50bps increase in the FX minimum reserve requirement for banks from 9.00% to 9.50% on April 26, shortly after the central bank first outlined plans for a monetary policy 'exit strategy' on April 14. http://www.emergingeuropemonitor.com/file/91693/CBT-Exit-Strategy-To-Remain-In-Place.html Tue, 24 Aug 2010 00:00 GMT