As far as the economic data is concerned, we are looking for another leg down in the activity indicators at the start of the second quarter, as support from temporary drivers (the Olympics, rush for foreign-branded consumer staples, etc.) fades. On the production front, manufacturing growth (which was the main driver in 1Q14) might have returned to the near zero mark, as seen in the shrinking weather-adjusted electricity consumption and a deeper contraction in rail cargo handling. The uncertainty shock might have taken a heavier toll on the consumer demand last month, as flagged in the deepening decline in non-CIS imports and a significant 8.0% YoY drop in car sales in April. Investment demand, in turn, is likely to have remained well underwater as companies hold off their investment plans amid elevated uncertainty and tightening access to credit. The puzzling decline in unemployment at the beginning of the year is likely to have been pared last month.
In CEEMEA, we shall be focusing mostly on Thursday, when central banks in Turkey and South Africa are to decide on rates. We and the consensus expect uneventful meetings, with rates on hold. With financial investors starting to look more favourably on emerging markets, the lira has recovered and the benchmark government bond yield has dipped to around 9%, amid market expectations of a small reduction in CBRT policy rates later this year once disinflation kicks off after an anticipated peak of over 10% YoY CPI growth in May. That said, SARB will also probably leave rates on hold, preferring to boost the economy after labour strikes hurt growth in 1Q14.