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Macro week ahead – CEE3 to post just a little change in record-low inflation in May

 
09.06.2014
This week, all CEE3 countries are scheduled to release their CPI data for May. In Russia, Rosstat is to publish its weekly CPI estimate (for 3-9 June), the AEB is to present May car sales data and the Ministry of Finance is to release budget execution numbers for last month. In most of our CEEMEA universe (Russia, Turkey, Poland and the Czech Republic), statistics on external trade activity in the last spring month are to come out. In addition, Turkey’s 1Q14 GDP print is due out tomorrow.

Inflation statistics across CEE3 are to dominate the news flow this week, though no surprise is expected with CPI in all three countries remaining well below the target ranges. Therefore, central bankers are likely to continue to take comfort in maintaining an ultra-easy monetary stance in the face of accelerating growth momentum, and might even consider additional easing steps should the recovery show signs of tapering out. In our baseline, we do not expect monetary policy to normalise (i.e. rate hikes) before 2015.

In Russia, during this shortened week (only three working days) a further plunge in car sales will likely flag continuously cooling momentum in private consumption, which is by far the main contributor to GDP, while weekly inflation will likely bring further evidence of a moderation in price gains across key drivers (pork, poultry and some veg.).

In Turkey, the economic growth forecast for the first quarter is already at 4.1% YoY, signalling a moderation from 4.4% in 4Q13 owing to the relatively tight monetary policy and macro prudential measures controlling the expansion of bank loans.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst

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