Economic Snapshot for South-Eastern Europe
September 4, 2019
The Turkish downturn set to drag on regional activity
Regional economic growth is expected to slow in 2019, largely due to a contraction in Turkey. Moreover, a weaker Euro area will likely weigh on external demand. That said, domestic metrics should support growth, underpinned by healthy private consumption and capital spending. Ongoing trade tensions, the EU slowdown and a fragile political climate in Turkey cloud the outlook.
South-Eastern Europe Monetary & Financial Sector News
Regional inflation rose to 9.4% in July (June: 8.8%), pushed up by broad-based stronger price pressures across most of the region. Particularly, inflation accelerated in Turkey after falling to a one-year low in June. Looking ahead, regional inflation should ease on the back of an expected moderation in Turkey’s inflation rate, as well as weaker demand pressures.
Central banks in the region continued down a more dovish path in recent weeks. In Serbia, the key policy rate was slashed for a second time this year, in light of a more uncertain global backdrop. Moving forward, regional central banks are expected to turn even more accommodative, in tandem with leading central banks, and given expected monetary policy unwinding in Turkey.
Most free-floating currencies in the region, and especially the Turkish lira, depreciated recently amid intensifying U.S.-China trade tensions. Regional currencies are expected to further weaken this year, as a more dovish ECB will weigh on the euro and euro-pegged currencies, while geopolitical tensions and a weak external position will drag on the lira and the leu, respectively.
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South-Eastern Europe Economic News
Croatia: Inflation eases in August
September 16, 2019
Consumer prices declined 0.3% from the previous month in August, following a sharper 0.5% fall in July.
Bulgaria: Inflation stable in August
September 16, 2019
Consumer prices inched up 0.1% from the previous month in August, following July’s 0.8% jump.
Romania: Industrial output falls for a second consecutive month in July
September 12, 2019
Industrial output fell 3.0% on an annual basis in July, an improvement from June’s 6.2% contraction but marking the second fall in a row.
Romania: Inflation recedes in August
September 11, 2019
Consumer prices rose 0.1% month-on-month in August, contrasting July’s 0.2% decline.
Bulgaria: Contraction in industrial production softens in July
September 10, 2019
Industrial output dropped 0.9% year-on-year in July, following a sharper 3.4% contraction in June, which had marked the lowest print in six years.
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