Economic Snapshot for South-Eastern Europe
October 30, 2019
Regional economic activity is expected to accelerate notably next year
Regional economic activity is expected to accelerate notably next year, largely reflective of a recovery in the region’s largest economy, Turkey. More broadly, domestic demand should remain healthy, despite ebbing fixed investment growth is some countries. However, global trade tensions and a slowdown in the Eurozone could weigh on exports and pose downside risks.
South-Eastern Europe Monetary & Financial Sector News
Inflation in the region fell to 5.5% in September from 8.6% in August, reflective of multi-year low inflation in Turkey amid muted domestic demand. Price pressures in most other countries in the region also moderated on cheaper oil. Next year, regional inflation is expected to ease compared to the 2019 average amid softer price increases in Turkey, Romania and Bulgaria.
Activity among regional central banks was muted in recent weeks with only the Turkish Central Bank making noise. A third above-expectations rate cut was delivered in Turkey as disinflation continued. Looking ahead to next year, the regional average interest rate should come down as Turkey continues to loosen its policy amid an improving inflation outlook.
The Turkish lira and the euro lost ground against the USD in recent weeks on renewed and lingering geopolitical uncertainty, while Romania’s and Serbia’s currencies appreciated. Next year, a weaker lira is seen weighing on the regional average exchange rate, although other currencies pegged to the EUR are expected to appreciate against the USD owing to a euro rally.
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South-Eastern Europe Economic News
Croatia: Inflation slips in October
November 15, 2019
Consumer prices rose 0.4% from the previous month in October, following September’s 0.8% upturn.
Bulgaria: Growth moderates but remains resilient in Q3
November 14, 2019
The economy grew 3.7% year-on-year (yoy) in the third quarter, marginally down from the second quarter’s 3.8% outturn, according to a preliminary release by the Statistical Institute on 14 November.
Romania: Growth slows to over five-year low in Q3
November 14, 2019
The economy grew 3.0% year-on-year in the third quarter, down from the second quarter’s 4.4% expansion and marking the weakest acceleration since Q2 2014, according to a flash estimate released by the Statistical Institute.
Turkey: Industrial output returns to growth in September
November 14, 2019
Industrial production returned to growth for the first time in 13 months, with output expanding 3.4% year-on-year in September, swinging from the 3.6% contraction recorded in August.
Cyprus: Growth gathers pace in Q3
November 14, 2019
Annual growth picked up to 3.2% in the third quarter from 3.0% in the previous quarter, which had marked the slowest expansion since Q1 2015.
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