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报告摘要

CEEMEAnomics Summary - 19 August 2015

Core Content Overview

This report provides an analysis of economic and political developments in Turkey, Poland, and South Africa, with a focus on inflation, monetary policy, fiscal impact, and political uncertainty.

Key Themes and Insights

Turkey: Monetary Policy and Political Uncertainty

The CBRT kept interest rates unchanged, despite plans to transition to a single rate. This decision has dented investor sentiment and led to TRY depreciation.
The TRY REER is now near levels that would justify an emergency rate hike, which may be necessary if the trend continues.
Political uncertainty is likely to persist, with the possibility of a general election re-run in late November if no coalition agreement is reached by 23 August.
The CHP is expected to take over the government formation process, but the likelihood of it forming a government is low due to MHP's opposition to pro-Kurdish parties.

Poland: Fiscal Impact of Pre-Election Promises

The Law and Justice (PiS) party's election promises could have an initial fiscal impact of 1.4% of GDP, increasing the budget deficit by over 1pp.
The main promises focus on boosting household income, which could increase real private consumption by 2.5pp compared to a steady-state scenario.
The fiscal multiplier is estimated to be 0.55-0.60, suggesting that while the fiscal boost could increase inflation by 0.8pp in the first year, the overall impact on real GDP growth is likely to be smaller due to a closed output gap.
The budget deficit could rise above 3% of GDP if all promises are implemented, which would increase public debt to 53% of GDP by 2019.
A higher public debt-to-GDP ratio may trigger a higher risk premium, which could hurt economic growth in the medium term.
The introduction of new taxes (financial and retail) may also increase prices and import costs.

South Africa: Inflation Trends and Monetary Policy Outlook

The SARB has lowered inflation estimates due to postponed electricity tariff hikes and falling oil prices.
The CPI inflation is expected to average 4.9% in 2015 and 6.3% in 2016, down from previous estimates.
Core inflation remains elevated, but the trimmed mean suggests a general slowdown in less volatile components of CPI.
The ZAR has been weakening, with food price inflation expected to rise due to drought and currency depreciation.
The SARB is expected to maintain a cautious approach to rate hikes, with a 25bp hike in November still possible, but a September rate rise unlikely.
China's shift to a managed float could provide some support to the ZAR in a trade-weighted basket, potentially reducing headline inflation by 0.1pp over 18 months.

Main Points and Key Data

Turkey

CBRT kept rates unchanged at 7.50% (repo) and 10.75% (overnight lending).
Political uncertainty is expected to last at least another quarter.
A general election re-run is likely in late November if no coalition is formed.
TRY is under pressure, possibly requiring an emergency rate hike.

Poland

Fiscal impact of PiS promises: -1.4% of GDP in 2016, rising to -1.8% in 2019.
Inflation impact: +1.1pp in 2016, +0.7pp in 2017-2019.
Real GDP growth could increase by 0.8-1.0% in 2016 compared to a steady-state scenario.
Public debt-to-GDP ratio could rise to 53% by 2019 if all fiscal measures are implemented.
Risk premium may increase due to higher debt, potentially reducing GDP growth by 1pp annually.

South Africa

CPI inflation is expected to average 4.9% in 2015 and 6.3% in 2016.
Core inflation remains at 5.4% y/y in July, but trimmed mean is lower, indicating generalised pricing weakness.
SARB is expected to maintain rates at 6.00% next month and consider a 25bp hike in November.
ZAR weakness is a key inflation risk, with food price inflation expected to reach ~6% y/y by year-end.
China's managed float could benefit the ZAR TWI and reduce inflation.

Important Notes and Disclosures

This analysis is produced by BNP Paribas and does not contain investment recommendations.
The Polish fiscal impact is based on a model assuming all measures are implemented.
The SARB's cautious approach is due to domestic and global economic frailties.
Political uncertainty in Turkey could have long-term implications for the TRY and economic stability.