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Macro week ahead


This week, Poland’s central bank is to publish its decision on the base rate. Meanwhile, we have CPI data for March in both the Czech Republic and Hungary, and for the first week of April in Russia. Furthermore, in Russia there is to be more hard data for March: the AEB is to present new car sales statistics, customs publishes its non-CIS imports, the Ministry of Finance is to unveil budget execution numbers and Rosstat is to present consumer confidence index for 1Q14.

In most of our CEEMEA universe (Russia, Turkey, Poland and Czech), statistics on external trade activity in February are due out.

We anticipate the various data points showing more evidence of the rising dichotomy between economies across the CEMEEA universe.

Russia, Turkey and South Africa are countries with elevated inflation (mainly thanks to FX weakness), where central banks lifted rates earlier this year to shore up local currencies and made internal adjustment to improve external balances. Thus, in Russia we expect continued weakness in car sales, a further decline in non-CIS imports and deteriorating consumer sentiment on top of it. Also, inflation could have edged up to 7.0% YoY during the first days of April, fuelled by currency weakness.

On the other hand, CEE3 has started to scramble out of recession on the back of a recovery in the Eurozone and the accommodative domestic policy mix, while price stability is not an issue given the accumulated slack on the labour market. Hence, the Polish MPC is likely to take comfort in a wait-and-see stance and confirm the recently extended forward guidance language (on hold “at least till end-3Q14”). On the CPI front, neither the Czech Republic nor Hungary is likely to surprise the market as the primary drags, such as the slack in consumer demand and pre-election cut in utilities tariffs, respectively, could well promptly curtail inflation pressure in March.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst


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