20140507-巴黎银行证券-CEEMEAnomics_15页_1mb

CEEMEAnomics Weekly Summary - 7 May 2014

Core Content

This week's CEEMEAnomics report focuses on political and economic developments in South Africa, Poland, and Turkey, with particular emphasis on election outcomes, labor market trends, and central bank policy decisions.

South Africa: Political and Economic Outlook

Election Outlook

• Election Day: 7 May 2014, marking the fifth democratic general election in South Africa.
• ANC Dominance: The African National Congress (ANC) is expected to win over 60% of the vote, securing President Jacob Zuma a second term.
• Polling Results: Final opinion polls indicate no major surprises, with the ANC maintaining its lead.
• Election Timeline: The final results, presidential inauguration, and cabinet announcement are expected within two weeks.
• Market Reaction: While the ANC's win is seen as stable, there is speculation about potential electoral backlash against leadership excesses, though the polls suggest this is unlikely.

Labour Market Pressures

• Job Losses: South Africa's labor market lost an additional 112,000 jobs in Q1, pushing the unemployment rate above 25%.
• Sectoral Impact: The largest job losses occurred in transport, community and social services, and trade sectors.
• Employment Gains: Manufacturing, finance, and utilities sectors saw job creation, but the majority of employment growth was driven by the public sector.
• Challenges: Structural bottlenecks and poor industrial relations continue to hinder recovery. The PMI index dropped below 50 in April, indicating weak economic performance.

Economic Challenges

• Unemployment: The high unemployment rate and discouraged job seekers suggest a long road to recovery for the labor market.
• National Development Plan (NDP): The government's commitment to the NDP is seen as positive, but institutionalized rent-seeking and corruption may undermine legal and regulatory stability.

Poland: Corporate Outlook Amid Ukraine Tensions

Economic Recovery

• Growth Trends: Poland's economy has shown recovery, with GDP growth accelerating from 0.5% y/y to 2.7% y/y as of Q4 2013.
• Q1 2014 Growth: The economy expanded by over 3% y/y in Q1 2014, with monthly data suggesting continued growth.

Corporate Sentiment

• Positive Outlook: Company executives reported a gradual improvement in sentiment, despite concerns over Ukraine tensions.
• PMI Data: The April PMI reading fell to 52.0 from 54.0 in March, reflecting some impact from the Ukraine crisis.
• Export Exposure: Poland's exports to Russia and Ukraine account for just over 8% of total exports, so the impact on GDP is expected to be limited.

Employment and Investment

• Payroll Growth: Companies are likely to increase payrolls in Q2 2014, driven by rising demand.
• Wage Growth: Wage pressures remain contained, with only 5% of executives reporting higher pay demands.
• Investment Trends: Corporate investment is expected to rise, with a positive outlook for the year, though credit growth is still weak.

Turkey: Inflation and Central Bank Policy

Inflation Trends

• April CPI Inflation: Surprised to the upside, reaching 9.4% y/y from 8.4% y/y in March.
• Core Inflation: Rose to 9.7% y/y, the highest since early 2007, driven by core goods inflation.
• PPI Inflation: Increased to 13% y/y, indicating persistent cost-push pressures.

Central Bank Response

• Rate Cut Signal: CBRT Governor Erdem Başci suggested the bank is considering a rate cut, despite rising inflation.
• Policy Rate Cut: A 50bp cut is expected by 22 May, potentially bringing the policy rate to 9.5% by June.
• Inflation Target: The CBRT's 2015 inflation target of 5% is seen as difficult to achieve, and a rate cut at this stage is considered premature.

Current Account and Risk Premium

• Current Account Deficit: Expected to narrow to slightly below 6% of GDP in 2014 from 8% in 2013.
• Risk Premium: Declined by 50-70bp, providing room for a rate cut.

Key Risks and Outlooks

• Ukraine Conflict: May affect certain Polish companies, especially those with high exposure to Eastern Europe.
• South Africa's Unemployment: Structural issues and poor industrial relations suggest a long-term challenge.
• Turkey's Inflation: Expected to remain above the 5% target, with May's CPI potentially rising into double digits if food prices increase.
• Poland's Economic Resilience: Strong private consumption and a recovering eurozone should support continued growth.

Summary of Key Events

• South Africa: Election on 7 May, ANC expected to win over 60% of the vote.
• Poland: Corporate confidence remains positive, with some risks from Ukraine tensions.
• Turkey: CPI inflation rose to 9.4% y/y, and a rate cut of 50bp is anticipated by the CBRT.

Disclaimer

• The analysis is produced by BNP Paribas Cadiz Securities (Pty) Ltd and reviewed by BNP Paribas.
• BNP Paribas holds a 60% stake in BNP Paribas Cadiz Securities.
• This analysis does not contain investment research recommendations.