20130814-巴黎银行证券-CEEMEAnomics_20页_986kb

CEEMEA Weekly Summary - 14 August 2013

Core Content

This report provides an overview of economic developments and political updates across Central and Eastern Europe (CEE), Russia, and South Africa. It highlights the improving economic conditions in the eurozone, which are positively influencing CEE growth, while also noting the challenges faced by Turkey and South Africa. Additionally, it discusses the structural issues in Russia's industrial sector and the political dynamics in South Africa.

Main Themes and Key Information

Poland: The Green Shoots of Industrial Growth

• Industrial Production Growth: Polish industrial production rose by 3.0% y/y in June, the fastest increase since October 2012, indicating a positive trend in the manufacturing sector.
• Leading Indicators: The PMI for July rose to 51.1, marking the first expansionary reading in 15 months. This suggests a gradual recovery in the industrial sector.
• Export Performance: Strong export growth, particularly in manufacturing, has been a key driver of the recent rebound. Exports increased by 5.1% y/y in the first five months of the year.
• Construction Sector: Despite overall industrial recovery, the construction sector remains weak, with output down 14.3% y/y on average over the past year.
• GDP Growth Outlook: Weak private consumption continues to drag on GDP growth. However, the worst of the economic slump is over, and growth is expected to pick up, though it will remain below potential.

Russia: The Slowing Wheels of Industry

• Industrial Slowdown: Russian industrial production growth slowed to 0.1% y/y in H1 2013, raising concerns about the country's economic trajectory.
• Sectoral Analysis:
  • Oil and Gas: A major contributor to GDP, this sector has been in decline due to structural issues and weak external demand. Growth is expected to remain at 1–2% y/y over the coming decade.
  • Food Industry: Expected to perform better due to stronger consumer demand.
  • Machinery: Likely to benefit from increased military spending, which could lead to 4–5% y/y growth in the sector.
  • De-industrialisation: The report suggests that de-industrialisation is likely to continue, with industrial growth expected to remain 2–2.5% y/y, below GDP growth.
• Government Influence: The government's large presence in key sectors, such as oil and gas, has limited efficiency and competitiveness. State-owned companies lag behind private firms in productivity.
• Economic Concentration: A high concentration of industry in the hands of a few large firms (many state-owned) has hindered broader economic growth and innovation.

South Africa: Q2 GDP Prospects Looking Better

• Manufacturing Recovery: After a contraction of 8.0% q/q saar in Q1, manufacturing production rebounded to 12.9% q/q saar in Q2, though much of this growth is due to base effects.
• GDP Growth Outlook: Q2 GDP growth is expected to rise to 3.5% q/q saar, but year-on-year growth is likely to remain around 2.0%, reflecting underlying economic weakness.
• Trade Sector: Retail and wholesale trade showed resilience, with sales growth of 1.9% y/y in June, and further improvements expected in Q2.
• Construction Sector: High-frequency data suggest some improvement, with a rise in building plans and completion, though confidence remains below neutral.
• Financial Services: Continued growth in domestic house prices, bank earnings, and employment in the financial services sector support the view that this sector is performing well.
• Output Gap: The output gap remains large, and the economy is expected to achieve only 2.0% y/y growth in 2013, down from 2.5% y/y in 2012.
• Interest Rates: The South African Reserve Bank (SARB) is expected to keep rates on hold for the rest of the year and into 2014 due to the negative output gap and inflation risks.

Turkey: Still Tight Liquidity

• Monetary Policy: The Central Bank of the Republic of Turkey (CBRT) is expected to keep key rates unchanged, continuing to use the interest rate corridor to stabilize the lira.
• Liquidity Conditions: The CBRT is maintaining tight liquidity by providing only a small portion of its funding through the policy rate of 4.50%, while the bulk is sourced through the primary dealer facility at 6.75%.
• Inflation Expectations: Market consensus for end-2013 CPI inflation is 7.2%, significantly above the 5% target, indicating upward inflation risks.

OPEC: Slowdown in Oil Production on the Cards

• Oil Demand Forecast: OPEC has kept its 2014 oil demand forecast at 90.7 mbbl/day, expecting non-OPEC supply to grow by 1.3 mbbl/day.
• Supply and Demand Balance: OPEC may need to reduce production to maintain balance, as non-OPEC supply is expected to outpace demand.
• GCC Countries: Economic growth in these countries has already slowed due to the decline in oil production, and this trend is likely to continue in 2014.

Political Updates in South Africa

• Democratic Alliance (DA): Mmusi Maimane was chosen as the DA's premier candidate for Gauteng in 2014, signaling a strategy to attract the black vote.
• Dina Pule Scandal: The parliamentary ethics committee chairman and registrar received death threats following a ruling against Pule, who has been replaced by Yunus Carrim.
• Treasury Tensions: There are ongoing tensions in the Treasury, with mutterings against Pravin Gordhan.
• EFF Activities: The Economic Freedom Fighters (EFF) visited a Nigerian 'prophet' and is pushing for more influence in the auto sector through Amcu.